U.S. URS Corp to buy Flint Energy for $1.25 billion.
By Canadian PressGeneral Oil Sands
Takeover gives U.S. construction firm foothold in oilsands.
Calgary — San Francisco-based URS Corp. is taking over Calgary’s Flint Energy Services Ltd. in a $1.25-billion deal that gives the U.S. construction firm a foothold in the Canadian oilsands, which it believes will be one of North America’s best hopes for economic growth.
Martin Koffel, chairman and CEO of URS, said on a conference call Tuesday that getting into Western Canada’s oilsands and shale gas opportunities has been a long-standing priority for the company.
“The oilsands, gas and oil shale industries that Flint serves are expected to be among the fastest growing segments of the North American economy over at least the next decade,” he said.
The company announced Monday it had struck a friendly deal to buy Flint and will also assume about $225 million in the Calgary company’s debt.
The deal gives URS significant new customers in the oilsands industry in northern Alberta and growing shale gas regions of Western Canada and the United States.
Flint gets about 80 per cent of its revenues from Western Canada and the rest from the United States. Of its Canadian revenues, about half come from heavy oil and bitumen development in northern Alberta, said Koffel.
The company is well known for building big oilsands projects at a time when foreign interest and investment in the deposits is growing.
Koffel said the deal will give Flint access to URS’s significant construction resources to help it accelerate growth.
“Flint will now have the resources to oversee more projects and simultaneously take advantage of the significant growth opportunities in its markets,” he said.
The $25 per share deal represents about a 70 per cent premium to Flint’s average volume-weighted share price over the past 30 days.
Flint shares haven’t traded at that level since the summer of 2008, before the financial crisis hit, said PI Financial analyst Roy Ma.
Flint shares most recently closed at $14.90 on the Toronto Stock Exchange; markets were closed for the Family Day holiday on Monday.
The deal is slated to close in the second quarter. The company will become a new URS division and will be run by current Flint president and CEO Bill Lingard.
Flint is expected to add about $3.5 billion to URS’ book of business once the deal closes.
URS has grown through acquisitions over the past few years, and its preference has been to keep those businesses fairly independent.
With a number of oilsands expansions planned in the next few years and shale gas production growing across North America, U.S., Chinese and other foreign players are looking to acquire Canadian companies to cash in on what is expected to be explosive growth in the energy sector.
Lingard said being part of URS will allow the Canadian company to tackle more projects at a time, leading to higher revenues.
Flint employs 10,000 people and is a key player in building and servicing oilsands projects. Its operations stretch from northeastern B.C. and Alberta down to Texas.
In the third quarter, Flint reported net earnings of $17.3 million, or 37 cents per share, up from $9.2 million, or 20 cents, in the same 2010 period.
Revenue in the three months ended Sept. 30 was $505.3 million, up from $406.5 million.
URS provides engineering, construction and technical services for power, infrastructure, industrial and commercial, and federal projects and programs. It has some 47,000 employees in more than 40 countries.
© 2012 The Canadian Press