By Andrew Callus
LONDON, Aug 27 (Reuters) - Oil and gas-focused British engineering firm Kentz Corporation, a target of potential takeover interest, delivered an upbeat outlook for the industry in its first-half results on Tuesday.
“Across the global engineering and construction space, many companies are indicating a more cautious outlook for the future than previously observed. However, the markets in which Kentz operates continue to be busy, and the first half of 2013 has seen one of the most active periods of bidding ever experienced by Kentz,” it said.
Kentz is involved in engineering procurement and construction and in technical support services, mainly in the oil, gas, petrochemicals, mining and metals industries. It works on giant oil and gas projects including Gorgon LNG in Australia and the Tengiz oilfield in Kazakhstan.
The company said its pipeline of bidding opportunities had risen 17 percent over the past 12 months to $15.0 billion and that it had secured a bid win rate in that period of one in three. It submitted a record $4.5 billion of bids during the second quarter and saw “continued momentum” into the second half.
Pretax profit rose 3 percent to $52.7 million, the company said. It raised its dividend by 20 percent to 6.6 U.S. cents.
On Aug. 19, the company said it had rejected two takeover approaches, one from larger London-listed rival AMEC at 565-580 pence a share, and a lower one from Germany’s M+W Group. It said both undervalued the company.
The Sunday Times since reported that top shareholders in the company have told suitors they would be open to a takeover at a price of about 650 pence a share.
Kentz shares, which climbed after news of the approaches, were little changed in early trading on Tuesday, up 1.2 percent at 573 pence, for an overall value of about 670 million pounds ($1 billion).
Chief Executive Chris Brown repeated that the two approaches had undervalued Kentz and that no further offers had been received since.
“I spoke to some (shareholders) last week and I expect to have spoken to pretty much all the top 10 by this week,” he said by telephone. “I expect and continue to expect good support from them ... If an offer comes in, it will be looked at and acted on in the best interest of our shareholders”.
He would not be drawn further on the takeover process.
Analysts have said one of the attractions of Kentz has been its significant reserves of cash. Kentz said in its statement that if it cannot find suitable acquisitions, it will consider a return of capital to shareholders.