May 02, 2017 | Industrials | Europe | Ended
What was initially a straightforward, strategic public UK acquisition, beneficial for each party involved, has changed its course after an influential new shareholder, Elliott Advisors UK, initiated a meaningful 6.8% stake in the takeover target, WS Atkins. During the next two months, until Atkins’ Court Meeting and EGM in June 2017, we can expect Elliott to follow its playbook which may include increasing its stake and pressuring SNC to increase its offer. Other event driven funds will piggyback off the activist hedge fund’s idea and buy Atkins shares, potentially large enough to put the Atkins shareholder vote in question. With committed financing, few antitrust risks and no SNC shareholder vote needed, the Atkins shareholder vote is the sole gating item that prevents the deal from completing as early as July of this year. Our analysis provides an informed look at M&A activism in Europe and evaluates the historical success rate of dissident target shareholders that demand changes to a transaction. This can offer a roadmap for any upcoming demands to SNC – in private or publicly. We also look at the expected Atkins shareholding required to block the transaction and highlight situations where scheme votes have both failed and succeeded due to M&A activism. Finally, we assess the need for SNC to pursue the acquisition in the face of a necessary bump to secure shareholder support.
Contents 1. Why is SNC-Lavalin Choosing WS Atkins and Not John Wood Group? 2. What Influences the Risk Arb Spread? M&A Activism 3. Accretion/Dilution and Antitrust Analysis 4. Can the Takeover Fail? What’s the Biggest Risk? 5. Timing and Risk Arbitrage Trading Thoughts (21 pages)
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