Kentz deal with Valerus a real game-changer as shares up 10pc
Shares in Tipperary-based engineering firm Kentz shot up by 10pc after the London-listed company launched a $435m (€317m) deal to takeover US gas services company Valerus Field Solutions.
Kentz will pay cash for the US business in a deal that will mean a big boost to the Irish company's earnings per share once it completes next year.
Kentz was heavily targeted in two acquisition attempts earlier this year, but the Valerus deal changes its prospects as a buy target, analyst Dan Slater of Arden Partners said.
"It really builds out the earnings per share impact and makes Kentz less bite-size as an acquisition target," he said.
"People will keep talking about Kentz as a merger and acquisitions target but this is a major deal and is going to change the business quite a lot."
The Valerus acquisition will bring the US shale market and opportunities in Latin America into focus for Kentz, which as yet has had little activity there to date.
It also adds new clients and builds up the engineering procurement and construction side of Kentz's business, with plans to get both companies' sales teams working together as swiftly as possible.
Christian Brown, Kentz's chief executive (pictured), said the acquisition would give the company "a significant presence in the growing US market".
The Valerus deal has boosted Kentz's share price to such an extent that it is no longer trading at the bargain rate that previously attracted suitors.
"Now the price has come right up, trading at a premium compared to Kentz's UK peers, so that a lot of that good value that made it seem a cheeky acquisition has gone away," said Mr Slater.
Both FTSE100 player Amec and German M+W group were knocked back in approaches to Kentz in September.
Valerus is a gas-handling specialist owned by US tycoon David Bonderman's TPG, with activity in Brazil, Mexico, Columbia and Venezuela.
The deal adds 665 employees to Kentz's 14,500 workforce, much of which is sourced from Ireland.
Kentz, which started off as a Tipperary electrical contractor, has grown to be a €790m market cap company with a €10bn business pipeline. Shares rose by as much as 10pc during trading yesterday morning following the announcement.
Earlier this year, Kentz boss Mr Brown said the company was tracking what's happening for the likes of exploration companies Providence Resources and Fastnet off the Irish coastline with interest.
"We would look to bid and win any business there," he said. "We're going to continue to grow and grow in double digits and hopefully grow the workforce."