Kentz

Kentz Corporation – Bid by SNC Lavalin

So, after all that Kentz has agreed to a cash bid of 935p a share from SNC Lavalin. Obviously I will have much more to say after the conference call which is at 1300hrs but in the meantime a few comments. As you will all know by now Kentz has been my favourite oil service company for a while, its ability to win contracts in many geographical locations and from a blue chip client list has led to an order book way bigger than the market cap indicated. The ability to convert that backlog into revenues, profits and dividends has rewarded shareholders although some investors in the market remained sceptical.

I have followed the company since the day of its float in London and it has always punched above its weight even managing to see off a cheeky approach by Amec last summer. It comes as no surprise, indeed readers will know that they were top of my shortlist, that SNC are the bidders, ever since Neil Bruce was unceremoniously despatched from Amec and turned up in Canada we knew he wasn’t there for a holiday.

I suppose that having wanted to see Kentz with a market cap of over a billion I should be happy, but under these circumstances the feeling is a touch restrained, it would have been more gratifying to see them get there under their own steam but holders will be very pleased. 935p a share is a working mans price rather than overly generous but chances of a counter are probably slim as unsurprisingly the main shareholder has pocketed the cash. Nevertheless, holders might want to sit tight in the short term as although the exit multiple is high enough it should be noted that the acquisition of Kentz will be earnings accretive to SNC by the end of the 1st full financial year indicating that this is not an expensive bid.

Kentz Corp 5 Year chart (not including today!)