Equans services group to become Bouygues' largest business segment

PARIS (Reuters) -French conglomerate Bouygues said that when its 7.1 billion euro ($8.2 billion) deal to buy technical services group Equans from Engie is finalised, Equans will become its largest business segment by revenue and headcount.

The merger between Equans and Bouygues’ Energies & Services arm will create a new standalone business segment with sales of 16 billion euros and 96,000 employees, of which 74,000 will come from Equans.

Chairman Martin Bouygues said in a statement that the acquisition - the biggest Bouygues has ever made - aims to create a new global leader in multi-technical services.

“The multi-technical services market is an up-and-coming one with strong growth potential, and will play a crucial role in the energy transition,” Bouygues CEO Olivier Roussat added.

The company said it would finance its acquisition of 100% of the Equans shares with its existing resources and a fully committed loan from partner banks, adding that the loan would ultimately be refinanced through bond issuance.

Based on an enterprise value of 6.7 billion euros - equivalent to 7.1 billion euros including IFRS 16 debt - and given the synergies and strong growth expected in the years ahead, the multiple of enterprise value to 2026 current operating profit will be 11.4, the company said.

The deal will be accretive for Bouygues EPS from year one and the potential for synergies is estimated at 120 to 200 million euros per year. The new entity aims for a current operating margin of over 5%.

Completion of the deal is expected by the second half of 2022.

($1 = 0.8655 euros)

Reporting by GV De ClercqEditing by Gareth Jones and Ros Russell