Worley Parsons taps investors to buy North American business

Stock

Worley Parsons (WOR) $17.84 as at 22/10/2018

Event

The engineering firm Worley’s spent the day in a trading halt after announcing a sizable acquisition, and a big capital raise to go with it. The company will be tapping shareholders for $2.9b in a deal that will see the company double in size by taking the energy & resources operations off US based Jacobs in a $4.6b transaction, partially funded in debt, whilst Jacobs will also receive just shy of $1b worth of Worley stock in the deal.

The new Worley’s will derive about 50% of revenue from North America, whilst it will also vastly increase the chemicals exposure the company will have. The deal seems complimentary, opening up Worley’s to a range of new clients. The deal is expected to deliver strong synergies  whilst the use debt funding should ensure its highly EPS accretive from the get go. New shares will be issued at $15.56, a 12.8% discount to the last traded price. The deep discount considers the sheer size of the transaction itself.

Worley Parsons (WOR) Chart

*note the last price in the chart above is the theoretical ex-rights price (TERP)

Market Matters Take/Outlook

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