After two mega deals in two months, SNC-Lavalin Group Ltd. isn't ruling out more acquisitions, but they'd have to be bite-sized in order to be considered.
The Montreal-based contracting and engineering company is plowing ahead with its strategic plan to stabilize the business, as it moves past the bribery and corruption scandals that shook the company in recent years.
Last month, SNC-Lavalin sold its electricity transmission company AltaLink to Warren Buffett's Berkshire Hathaway Inc. for $3.2-billion. The move was part of the company's plan to exit its mature infrastructure-concession investments.
SNC-Lavalin followed up the sale with its purchase of oil and gas services company Kentz Corp. Ltd. for about $2.1-billion on Monday, in an effort to focus on the resource sector and tap into the right geographic markets.
The Kentz acquisition positions the company for organic growth rather than cost savings, though there will be $50-million in synergies when the businesses combine, said the company's chief executive Robert Card on a call with analysts. He said that there are other subsegments of the oil and gas business that SNC-Lavalin would be interested in adding to this new base. "I would not rule out some more niche type opportunity there," Mr. Card said.
Alongside the possibility of a bolt-on acquisition, Mr. Card said SNC-Lavalin would be interested in building out a few core areas of its business.
One is the services business in the power segment. Another is expanding services and geographic footprint in infrastructure and the environment. Mr. Card also says the company wants to "take another look" at strengthening its expertise in its mining business.
Before any of this can happen, however, the company has two key priorities: resolving issues with legal counterparties, and closing and integrating the AltaLink transaction.
"That is what we will be spending our time on in the near term," Mr. Card said.
The other near term focus will be on finding a buyer for another mature asset, the 407 toll highway in Ontario.
"Given the success of what has it transpired over the last couple months, I would say that is more near-term then mid-term ," Mr. Card said. As a "mid-term opportunity," the company was thinking of a one-to-three-year time frame for selling their stake. "We are looking hard at whether we want to accelerate that," Mr. Card said.