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Atkins approached by Canadian rival

British engineering giant WS Atkins has received a £2.1bn bid from Canadian rival SNC-Lavalin. 

SNC-Lavalin, which bought London-listed engineer Kentz for £1.2bn in 2014, has approached Atkins' board intimating a cash takeover at £20.80-a-share.

The approach, 35p% above Atkins’ closing share price on Friday night, sent shares in WS Atkins soaring, jumping as much as 30.13% to trade at a new high of £20.04, after Atkins board said it was at a level it would be prepared to recommend, subject to agreement.

Analysts suggested that a third party could enter the fray as the consultancy industry continues to consolidate. Joe Brent, analyst at Liberum, said it was likely that another party could yet spoil SNC's party, given that the last three deals in the consultancy sector - for Sweet, Parsons Brinckerhoff and Hyder - resulted in a bidding war.

"We believe that many of the larger companies could also table a bid," he said. WS Atkins is currently the 14th largest engineering consultancy firm globally, while SNC is the 12th.

Atkins, which is working on the design of the new Hinkley Point power station, said that SNC's offer would “deliver value to shareholders” as long as the two parties could reach an agreement. SNC must now table a firm offer for Atkins before May 1.

Founded in 1911, SNC-Lavalin operates from over 50 offices worldwide claiming to be is one of the world’s leading engineering and construction groups and a major player in the ownership of infrastructure.

Around 40% of the group’s C$8.4bn (£5bn) revenue in 2016 came from the oil and gas sector, with two other sectors – construction & Infrastructure, and power – each contributing 20%.

Atkins, which employs 18,000 staff, achieved nearly £1.9bn revenue in 2016 delivering £131.1m pre-tax profit. Around half of revenue was generated from the UK, with a fifth coming from North America.

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