Engineering and construction specialist Kentz has rejected a takeover approach from Amec, which employs around 1,000 people in the North East and has offices in Darlington, Newcastle, Wynyard and North Shields.
In an update posted on the London Stock exchange yesterday, Amec confirmed it had made an approach to the company on August 5, outlining a possible conditional cash offer for its issued and to-be-issued share capital. This, however, was rejected on the grounds that it undervalued the company.
Amec said: “The proposed offer, at a price of 565p to 580p per Kentz share, represents a substantial premium to the current share price which has itself appreciated significantly since Amec made an earlier approach on July 11.
“Based on publicly available information, Amec believes the proposed offer represents a highly attractive opportunity for Kentz and its shareholders, though it has been rejected by the board of Kentz.
“This opportunity is consistent with Amec’s strategy as it would extend Amec’s geographic footprint in the growth regions, increase the range of services offered and enhance Amec’s position in two core markets, oil and gas, and mining.”
The news comes shortly after the publication of Amec’s half-year results, which showed adjusted profit before tax of ï¿½154m, 2% up on the previous year.
Core profit, meanwhile, rose 4% to ï¿½158m, but that was short of a forecast of ï¿½163m. However, the engineering giant said it continued to see strong demand for its services, despite a challenging market.
Amec also told reporters at the start of the month it was looking to make acquisitions in the oil and gas sector, and if no deals were forthcoming it would consider a cash return for shareholders.
Kentz, which employs 14,500 staff across 30 countries, has mining, oil, gas, and infrastructure projects all over the globe.
The company said in a statement yesterday: “The board of Kentz confirms that a highly conditional and unsolicited proposal was made recently by Amec plc valuing the Company at 565p-580p per share in cash. The board reviewed this proposal in conjunction with its advisors and concluded that it undervalued the company and therefore unanimously rejected the approach.
“Kentz has a strong and consistent track record of revenue and earnings growth since its IPO in 2008.
“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 German M+W Group has also made a takeover offer, lower than of Amec, but the board at Kentz has rejected that too and is not considering any other offers.