Acquisition in the Oil Patch (URS, FESVF)
US construction company URS Corp. (NYSE: URS) has agreed to acquire Canadian oil field services firm Flint Energy Services Inc. (OTC: FESVF) for CDN$1.25 billion and CDN$225 million in Flint debt. The price works out to about CDN$25/share, a premium…
US construction company URS Corp. (NYSE: URS) has agreed to acquire Canadian oil field services firm Flint Energy Services Inc. (OTC: FESVF) for CDN$1.25 billion and CDN$225 million in Flint debt. The price works out to about CDN$25/share, a premium of nearly 68% to Friday’s closing price for Flint.
URS is acquiring about 10,000 Flint employees working in the oil and gas fields of western Canada, and the US southwest, Rocky Mountain, and Appalachian regions. URS will use its existing credit facility and says it has a “financing commitment for a new bridge facility” to cover the remaining cash payout.
According to yesterday’s announcement from URS:
Assuming a second quarter close, we expect to achieve pre-tax cost synergies of US$10-$15 million in 2012, with additional savings expected in the following years as we benefit from economies of scale. We expect the transaction to be accretive to URS’ 2012 EPS between US$0.20 and US$0.30 per share.
The deal needs approval from Flint shareholders as well as customary closing approvals. The acquisition is expected to be completed in the second quarter.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
