Kentz has announced the acquisition of Valerus Field Solutions for $435m in cash to be financed by a new $400m facility from a blue chip group of banks at Libor +2 1/4%.
At first glance this looks almost too good to be true, Valerus is mainly North and South America focussed and this would provide Kentz with the ideal opportunity to expand its footprint in these areas. With exposure to onshore oil and shale gas markets, an area not so far one Kentz has been in and in Latin America there is a presence in Brazil, Mexico, Colombia and Venezuela.
The deal appears to have very strong financial merits, Valerus has strong revenue growth and 60% of 2014 revenues under contract and like Kentz generates cash and has high gross margins.
Guidance for Kentz’ 2014 EPS is increased to 95-100c which means that the deal is earnings enhancing in year one.
The market has been waiting for an acquisition from Kentz for a long time but -at first glance- this appears to tick all the right boxes. It should enhance group capability and move it up the value chain, it will expand the geographical footprint and give Kentz a welcome bulking-up, good for the integrated solutions market.
Meeting is at 1030 which I will attend so much more after that, full blog this afternoon, unless I have missed something this looks an eminently sensible deal for the company.