Engineering news
Kentz supply the mechanical, electrical and instrumentation for the Chevron-run Gorgon LNG Project on Barrow Isle in Western Australia under a contract worth £1.5 billion
An engineering group with oil and gas projects across the globe was today the subject of a takeover tussle between British and German rivals.
Kentz Corporation said a £690 million approach by engineering giant Amec undervalued it. It has also rebuffed a lower offer from M+W Group.
Kentz delivers mechanical, electrical, controls and instrumentation engineering, construction and management services worldwide. Recent big projects include electrical wiring on a giant gas platform in Australia and installing a telecoms network at an oil sands project in Canada.
London-based Amec said buying Kentz would boost its presence in the oil, gas and mining markets, and offer an attractive deal to its target's shareholders.
But Kentz rejected Amec's latest approach, which valued it at between £673 million and £691 million, after turning down another attempt last month. It also spurned an approach from Stuttgart-based M+W, which it said was worth less than Amec's.
It said Amec's "highly conditional and unsolicited" approach was based at 565p to 580p per share. Kentz added it is not considering any other offers, nor is it considering a strategic review with the aim of selling the firm.
The company, which floated on the stock market in 2008 and is listed on the FTSE 250 Index, said it has a strong and consistent track record of revenue and earnings growth. Last year Kentz earned pre-tax profits of £67 million on revenues of £1 billion.
Kentz said: "The company has strong growth prospects given its substantial order backlog, prospective bidding pipeline and robust balance sheet, together with a clear and realisable strategy to create further shareholder value as a standalone entity."
The firm employs 14,500 staff and works in oil and gas, chemicals, mining and metals. Its roots trace back to 1919 as an electrical contractor in Tipperary, Ireland.
Amec, which is listed on the FTSE 100 Index, employs about 29,000 staff in 40 countries. The engineer said its proposal offers a substantial premium to Kentz's share price and is a "highly attractive opportunity for Kentz and its shareholders".
M+W, which has 7,700 staff and spans sectors including electronics, life sciences, chemicals and energy, said it is still considering its options for Kentz.
Amec and M+W now have until September 16 to make a firm offer for Kentz or walk away. Shares in Kentz soared by about 24%.