URS Corp. will acquire Flint Energy Services for $25 per share in cash, or $1.25 billion. URS (NYSE: URS) also will assume approximately $225 million in Flint (TSX: FES) debt. The transaction was approved unanimously by both the URS and Flint boards of directors.
The acquisition will significantly expand URS’ opportunities to serve clients in the oil and gas industry. Flint currently supports many of the largest companies operating in the oil, oil sands and gas producing regions of Western Canada and in the Southwest, Appalachian and Rocky Mountain regions of the United States.
The acquisition will be implemented through a court-approved Plan of Arrangement under Canadian law and is subject to the approval of Flint security holders, relevant regulatory approvals and other customary closing conditions. The transaction is expected to close in the second quarter of 2012, to be accretive to URS’ 2012 GAAP earnings, and to increase URS’ revenues from the oil and gas sector to approximately 22% of total revenues.
Flint has approximately 10,000 employees and a network of approximately 80 locations in North America. The company’s diversified activities span the full cycle of oil and gas exploration and production, including constructing well pads, moving rigs, manufacturing processing equipment, installing small and mid-diameter pipelines, transporting fluids, performing a wide range of mid-cycle production services, and constructing and maintaining large oil sands facilities. Revenues from Western Canada’s oil, oil sands and gas producing regions accounted for approximately 80% of Flint’s revenues for the trailing twelve months from September 30, 2011, with the remaining 20% coming from the United States. Flint is expected to add approximately $3.5 billion to URS’ book of business upon closing. Following the close of the transaction, Flint will become a new division of URS, led by W. J. (Bill) Lingard, Flint’s President and Chief Executive Officer, as the Division President.
Martin M. Koffel, Chairman and Chief Executive Officer of URS, said, “Expanding our presence in the oil and gas sector has been a longstanding strategic priority for URS. Flint is one of North America’s leading fully integrated production and construction services providers to the oil and gas sector, with many long-duration construction contracts and multi-year maintenance agreements. Through this combination, URS will be well positioned in segments of the oil and gas industry that we expect to have attractive margins and growth rates. In addition, by joining with URS, Flint will be able to offer its base of multinational clients the full range of engineering, procurement and construction management services through URS’ existing operations.”
Stuart O’Connor, Chairman of Flint’s Board of Directors said, “We are very pleased with the arrangement with URS. It delivers a significant cash premium to our stockholders while also allowing Flint to accelerate the growth of its business by offering a more complete suite of services to clients.”