Engineering giant Worley Parsons will double in size after buying Jacobs Engineering Group’s energy, chemicals, and resources division for a cash and debt-free enterprise value (including debt) of $US3.3 billion ($4.6 billion).
The presentation from WorleyParsons ((WOR)) on the work flowing from its major oil & gas and resources customers was upbeat. The company is confident of winning a fair share of the work as the industry recovers.
After years of cutbacks and huge staff losses, WorleyParsons is opening its corporate wallet and will expand into the North Sea after buying AFW UK Oil & Gas for $303 million, but not before asking big shareholders for help.
After questionable outcomes from previous acquisitions,brokers suspect WorleyParsons ((WOR)) will be hoping its deep dive into the North Sea finds the pearl. The company has extended its maintenance, modifications and operations (MMO) business, with an acquisition which should provide a leading capability in a market that has a relatively small number of competitors.
The company's investor briefing has shown how the combined business is positioning to capture more work as Jacobs ECR is integrated. Credit Suisse remains comfortable that, pending a smooth integration, leverage to the controlled cost base and new scale will provide unique exposure to the global energy mix.
WorleyParsons has acquired the energy, chemicals & resources division from Jacob's Engineering for US$3.3bn. The company plans to fund the acquisition via a non-renounceable entitlement offer, stock, and additional debt.
UBS tinkers with WorleyParsons’ net profit estimates to account for an extra A$20m tax charge relating to recent changes in US tax law. UBS has treated this, and the previous A$58m announced in the first-half result, as significant items so earnings-per-share figures are unchanged.
WorleyParsons is exposed to the leading edge of the oil and gas expenditure cycle, Morgan Stanley observes, and the recent strategic investment by Dar Group offers downside protection should activity and profitability take longer-than-expected to come through.