SNC-Lavalin made an indicative offer of 2,080 pence in cash for each Atkins share.
Atkins鈥� share price rapidly moved up from 1603 towards 拢20 per share in response.
The Atkins board indicated to SNC-Lavalin that the possible offer 鈥渨ould deliver value to Atkins shareholders at a level that the board would be prepared to recommend, subject to reaching agreement on the other terms and conditions of the offer鈥�.
Talks have now opened between the two companies about other terms and conditions of a possible offer, which is conditional on, among other things, diligence and financing.
SNC-Lavalin is approximately twice the size of Atkins, with 35,000 employees around the world to Atkins鈥� 18,000 employees. In 2014 SNC-Lavalin paid 拢1.2bn to acquire Kentz Corporation, an oil & gas services company with 15,500 employees in 36 countries. An Atkins deal would top that.
For the year ending 31st March 2016, Atkins made 拢131.1m profit before tax (2015: 拢106.7m) on revenue up 6% to 拢1,861.9m (2015: 拢1,756.6m).
SNC Lavalin鈥檚 turnover dipped 11% in 2016 to just over 拢5bn. It's UK office is in Croydon.
Atkins had previously been subject to unconfirmed reports about a takeover approach from CH2M.
Confirming the approach, SNC-Lavalin said that if the transaction was to proceed, it would expect up to CAN$1.9bn of the CAN$3.5bn purchase price to be financed by Caisse de d茅p么t et placement du Qu茅bec (CDPQ) in the form of $400m in equity and a $1.5bn non-recourse loan secured by the value and cashflows of the company鈥檚 interest in Canada鈥檚 Highway 407. The balance would be raised using a mix of additional debt and equity and other financing means.
Under UK takeover rules, SNC-Lavalin now has until 5pm on 1st May 2017,either to announce a firm intention to make an offer for WS Atkins or announce that it does not intend to make an offer.