France's Vinci Inks $5.75B Deal for Big Unit of Spain-Based ACS
French contracting giant Vinci will boost its global energy construction business, particularly in renewables, in a $5.75-billion agreement to buy the energy business of Spanish rival ACS.
The deal would include “most of the ACS industrial services contracting business,” with 45,000 employees in about 50 countries and an expected annual revenue increase of more than $7 billion, mainly from ACS operations in Spain and Latin America, said the April 1 Vinci announcement.
The purchase, set to close at the end of 2021, would add to Vinci’s earnings from the first year after closing, with the estimated boost “in the mid-to high-single-digit range,” it said.
With the acquisition, Vinci aims to bolster its energy contracting business, particularly in the growing renewables fields, the company said, adding that it and ACS have identified “new opportunities for the short and medium term” to generate about 15 GW, mainly in solar PV and onshore wind energy, as well as about 8 GW of upcoming offshore wind projects.
'Major Player' in Renewables
Vinci said its “contracting/concession/O&M business model, combined with the ACS projects development platform should enable [the French firm] to become a major player in the renewables field.”
The contractor will also gain eight greenfield concessions projects under development and/or construction, mainly related to electrical transmission upgrades.
Under the deal, ACS would also gain $47 million for each ready-to-build gigawatt of generating capacity its energy unit develops under Vinci for up to 8.5 years after closing, with a ceiling of 15 GW or $705.5 million.
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Vinci and ACS also plan a joint venture, 51% owned by the former, which will acquire completed renewables assets built by ACS in the future, the proposed purchaser said.
“This acquisition is a unique opportunity for Vinci to create a global player in energy contracting and to develop renewables projects, remarkably fitting its strategy,” said Xavier Huillard, Vinci chairman and CEO. “We will capitalize on ACS's recognized track record to enhance Vinci’s contribution to the climate transition and pursue our environmental ambition together.”
Vinci ranks at No. 6 on ENR’s Top 250 Global Contractors list, reporting $54.6 billion in global construction revenue in 2019, with $24.5 billion of that outside of France. About 15% of revenue is in the power sector and 4% in industrial and oil and gas. ACS ranks at No. 7 on the list, reporting $45 billion in mostly overseas revenue. According to the ranking, 10% of its revenue was in power, with 6% in industrial and oil and gas. Both firms reported the largest revenue chunk in transportation work.
Vinci is ENR's top ranked global contractor in Europe, No. 4 in Latin America, No. 5 in Canada, No. 7 in the U.S. and Africa, and No. 10 in Australia. It also is top-ranked in global telecommunications construction revenue, second in power, third in transportation and seventh in industrial.
According to Reuters, the price was less than the $6.1 billion non-biding offer Vinci made last October to buy the ACS industrial-energy unit. Its current announcement did not disclose why the deal was agreed at a lower price or if there was a change in assets to be acquired.
The acquisition will be financed through Vinci’s available cash and credit lines, the company said.
