John Wood Group PLC (“Wood Group”), the international energy services company, has entered into an agreement to acquire PSN Limited (“PSN”) for a total enterprise value of US$955 million (the “Acquisition”). PSN will merge with Wood Group’s Production Facilities business to create the leading global brownfield production services provider, Wood Group PSN.
PSN is an international energy services company employing over 8,000 people worldwide and operating in 23 countries. In the year to 31 December 2010, PSN is expected to generate approximately US$100 million of EBITDA on revenues of approximately US$1,200 million.
PSN’s Chief Executive Officer (“CEO”), Bob Keiller, will become CEO of the combined production services business and the deputy CEO will be Les Thomas, currently CEO of Wood Group Production Facilities. On completion, Bob will join the Wood Group Board alongside Les Thomas.
The Acquisition of PSN advances Wood Group’s strategy of maintaining an appropriate balance between oil & gas development and later cycle production support, creating global market leading positions, developing long term customer relationships, extending services and broadening international reach.
Wood Group PSN will be a global leader in brownfield production services and be well positioned for growth across the oil & gas industry through:
- increased exposure to, what the Directors currently believe to be a global production services addressable market in excess of US$50 billion per annum;
- strengthening Wood Group’s brownfield production services operations in many of its current locations and expanding into a number of important new locations;
- extending and deepening strong long term customer relationships. It will position the enlarged group as a trusted production services provider to the International Oil Companies, with major customers including BP, Chevron, Conoco Phillips, ExxonMobil, Marathon, Shell and Total and to a large number of independent operators including Centrica, Hess, Nexen, Premier and Talisman, and as a key partner to a number of National Oil Companies including Gazprom and TAQA;
- the combination of two proven management teams and a global workforce of over 22,000 people;
- comprehensive support through the life cycle of oil & gas facilities, with an unrivalled track record in the key brownfield engineering & construction and operations & maintenance segments. Wood Group PSN will also have specialist expertise in pre-operations support, commissioning, training, asset integrity and decommissioning.
Commenting on the Acquisition, Allister Langlands, Chief Executive of Wood Group, said:
"Wood Group PSN will have a larger footprint, deeper resources and capabilities and, by selecting best practices, be able to deliver additional added value to our customers. The combined business will be better positioned to help tackle current key industry issues, including operational assurance, competency, reliability and asset integrity."
Bob Keiller, CEO of PSN, who will lead Wood Group PSN, said:
“I believe that by uniting PSN with Wood Group Production Facilities we have a unique opportunity to grow our business to benefit our customers and our people. Since the management buyout in 2006, we have achieved significant success and expansion. This transaction positions us for the next stage of PSN’s development, enabling us to strengthen our service capability to existing and new customers whilst providing enhanced career prospects for our people. Wood Group PSN will retain our clear commitment to safety, excellence in service delivery, innovation and continuous improvement, allowing us to continue to build lasting and strong relationships with clients.”
The Acquisition will be significantly earnings and cash flow enhancing immediately following completion.
The Acquisition is subject to relevant anti-trust approvals and completion is expected in the second quarter of 2011. Prior to completion, both Wood Group and PSN will continue to operate as separate entities.
Wood Group's other businesses in Engineering, Well Support and Gas Turbine Services will be unaffected by the Acquisition.
This summary should be read in conjunction with the full text of the announcement.