SNC-Lavalin bats away rumours of Atkins sale
Canadian multinational SNC-Lavalin has slapped down the suggestion that Atkins – a British engineering firm it acquired in 2017 – is up for sale. While the firm is executing a large restructuring exercise at present, part of this has seen Atkins moved to its very heart, as part of the new SNCL Engineering Services umbrella.
Headquartered in the UK, Atkins is a geographically diversified global company, boasting approximately 18,000 employees spread across the US, Middle East and Asia, together with their leading locales in Britain and Scandinavia. The company’s portfolio notably includes work on the controversial Hinkley Point nuclear power-plant, and Crossrail2 project – a £32 billion project which came under threat after the increasing uncertainty of Brexit and Britain’s upcoming general election.
In 2017, Canadian firm SNC-Lavalin acquired Atkins, attracted by its 2016 revenue of £1.862 billion. While a quarterly report from SNC stated the operational integration of Atkins was complete, and claimed it was on track to deliver projected cost synergies of $120 million by the end of 2018, recent rumours of a sale suggest the marriage has been far less harmonious than either party is willing to admit.
SNC’s move for Atkins came after another hefty acquisition of the UK-listed Kentz Corporation, with the oil and gas services specialist costing a grand total of £1.16 billion in 2014. The deal for Atkins was funded through a combination of equity and debt, including a £870 million loan from SNC-Lavalin’s largest shareholder. The company claimed it hoped to realise C$120 million of this by the end of 2018, with the targeted elimination of a number of Atkins’ corporate costs, as well as its entire costs, along with additional expense and operational savings – something which at the time led to speculation of large-scale redundancies being planned.
Two years on, SNC finds itself under pressure from its earlier spending spree. The sudden departure of CEO Neil Bruce in June 2019 saw Ian Edwards take over in an interim capacity, announcing a major restructuring project would need to take place just weeks into his tenure. The firm revealed a C$2 billion loss in its most recent fiscal half, and while restructuring has so far consisted of exiting its poorly performing lump-sum turnkey contracting operations, rumours soon started to circulate that a sale of Atkins could be on the cards.
Singaporean sovereign wealth fund Temasek was soon said to be in talks with SNC by the British and Asian media. Indeed, even The Times reported that the Canadian conglomerate was believed to have approached potential bidders, including Temasek, over the sale of Atkins. However, these reports have now been quashed by SNC. In a statement released to engineering news-site Environment Analyst, the firm said that “conclusively” it was “not looking at this."
The statement went on, "SNC-Lavalin’s new strategic direction has Atkins as a core element as we grow our Engineering Services; our other focus is on successfully completing the remaining work under our SNCL Projects business – these are lump-sum turnkey contracts that we are no longer bidding on going forward.”
The strategy SNC pointed to in its statement was unveiled by Interim CEO Edwards earlier in the year, and put the focus on de-risking the business and generating more consistent earnings and cash flow, enabling it to focus on "high-performing and growth areas". As part of this, Atkins is understood to have been positioned at the heart of the firm’s newly-named SNCL Engineering Services umbrella, which also incorporates its nuclear, infrastructure services and capital offerings.
