Deals



Atkins to acquire nuclear services division of EnergySolutions


Posted: 17th November 2015 08:42

WS Atkins plc is pleased to announce it has signed an agreement to acquire the Projects, Products and Technology segment of EnergySolutions ("PP&T"), an international nuclear engineering services business, for an enterprise value of US$318 million (£206 million1).

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PP&T delivers nuclear waste remediation projects, products and technology solutions

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Offers attractive long-term growth and profitability characteristics

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Accelerates Atkins' nuclear strategy with complementary customer base and capabilities

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Differentiates Atkins' market position through unique technologies

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Brings strong management and cultural fit

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Represents a strategically and financially compelling transaction

 PP&T is an innovative nuclear energy business, comprising 650 people delivering a wide range of technical engineering and programme management services for the decontamination and decommissioning of high hazard nuclear facilities, and for the environmental remediation of nuclear waste storage sites. For the year ended 31 December 2014, PP&T reported revenue from continuing operations of US$281.4 million and adjusted operating profit2 of US$30.7 million (10.9% adjusted operating margin).  As at 30 September 2015, PP&T had gross assets of US$171.3 million.

Professor Dr Uwe Krueger, CEO said, "This acquisition accelerates our nuclear strategy and creates a global platform.  Our combined business is well positioned in all the major nuclear markets in North America, UK, Europe, Middle East and Asia Pacific. In the US, which has the largest nuclear fleet, we are at the top table for decommissioning, site operations, major projects and consultancy. This complements our acquisition last year of Nuclear Safety Associates ("NSA"). We are also acquiring innovative technologies that are a key differentiator in the growing and profitable nuclear market."

Further information about the strategic benefits of the acquisition is detailed below.

Offers attractive long-term growth and profitability characteristics

Atkins has successfully grown revenue from its nuclear business at a compound annual growth rate of more than 20% since 2011/12 while delivering operating margins of approximately 10%. The required combination of high levels of technical engineering expertise, proprietary technologies and deep client relationships creates barriers to entry and drives attractive margins. Major investment in new build projects and the ageing of nuclear assets worldwide will present significant opportunities for the broader Atkins Group going forward. For example, of more than 400 current reactors worldwide, nearly 75% are more than 25 years old.

Accelerates Atkins' nuclear strategy with complementary customer base and capabilities

PP&T is a market leader in designing solutions for the treatment and stabilisation of high and intermediate hazard level nuclear waste in North America. With its proven track record of executing large and complex projects, including high profile Department of Energy, US Navy and Atomic Energy of Canada Limited projects, PP&T provides Atkins with immediate access to Tier 1 contracts for the management and decommissioning of nuclear sites in North America.

In addition, PP&T has a strong presence in Asia Pacific, a large and fast-growing new build and decommissioning market. In Japan, PP&T designed and supplied several water treatment systems, based on leading technology, to treat contaminated water from the damaged Fukushima Daiichi nuclear power plant. In China, PP&T is close to completing two significant waste management facility projects for new build reactors. By leveraging its technology, reputation and relationships, we are well positioned for future opportunities over the near to medium term.

The acquisition of PP&T enhances further Atkins' market presence in the UK, where Atkins has strong relationships with EDF and Urenco. PP&T's skills and capabilities, combined with its proven Tier 1 track record, will also serve to strengthen Atkins' positioning for future decommissioning opportunities across Europe, especially in Germany.

Differentiates Atkins' market position through unique technologies

PP&T's highly specialised technologies are a differentiator for the business within the nuclear market. By using its portfolio of proprietary nuclear waste treatment technologies, PP&T is able to generate higher margins and support entry into new markets and geographies.

Brings strong management and cultural fit

PP&T brings a world-class management team with an excellent reputation across international nuclear markets. PP&T's senior management team has extensive experience in the nuclear industry and expertise in executing large and complex projects worldwide.

Atkins has developed a deep understanding of PP&T and how it operates and there is a strong cultural fit between the two organisations. In an industry with a scarcity of talent, the skills and experience of PP&T's 650 professionals are in great demand. Atkins is confident that PP&T's management team will help accelerate further the growth of Atkins' nuclear business.

 Delivers attractive financial returns

The acquisition delivers operating margins above Atkins' 8% target, and is expected to be double-digit earnings enhancing in the first full year post completion and to exceed Atkins' cost of capital in the second year post completion. The transaction is forecast to result in pro-forma net debt to EBITDA of c. 0.2x (c. 1.4x including net pension deficit).

Completion of the acquisition, which is conditional upon customary regulatory approvals in North America, is expected to occur in Q1 of calendar 2016. The acquisition will be funded from Atkins' existing cash resources and available committed bank facilities.


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