Bouygues SA and Equans Group agree to €7.1 billion merger

Bouygues and Equans Group agree to merge
ENGIE enters into exclusive negotiations with Bouygues for the sale of EQUANS for a valuation of €7.1 billion

PARIS, FRANCE: Bouygues SA and Engie have signed a purchase agreement according to which Bouygues has agreed to acquire all of the Equans group.

Based on an enterprise value of €6.7 billion, and given the synergies and strong growth expected in the years ahead, the multiple of enterprise value to 2026 current operating profit is 11.4x.

The acquisition of 100% of the shares of Equans will be financed from the Bouygues group’s existing resources and a fully committed loan from partner banks, which will ultimately be refinanced through bond issuance.

The proposed merger between Equans and the Bouygues group’s Energies & Services arm (Bouygues Energies & Services and Kraftanlagen München) is a unique opportunity to create a French world leader in energy, digital and industrial transition. Equans would then become the largest business segment within the Bouygues group by sales (around €16 billion) and number of employees (around 96,000).

The proposed acquisition has been approved unanimously by the Board of Directors of Bouygues.

The acquisition of Equans forms part of the Group’s aim to expand in the Energies & Services market. The multi-technical services sector notably covers electrical engineering, HVAC, refrigeration, mechanical engineering, robotics, digital, telecoms networks and facilities management.

It is a strong growth potential market, forecast to grow by between 3 and 4% over the next five years.

The sector lies at the convergence of three key transitions: (i) energy transition, to deliver the decarbonisation that industry needs; (ii) digital transition, driven by the explosion in data and increased needs for connectivity; and (iii) industrial transition, as production facilities become increasingly automated and computerised.

It is also a resilient sector, dominated by long-term contracts with recurring revenue streams and a strong EBITDA-to-cash conversion rate, which will help underpin the Bouygues group’s free cash flow.

This new entity will be built around Equans, augmented by the Bouygues group’s Energies & Services arm. It will be perfectly placed to grasp new business opportunities, and to accentuate differentiation by leveraging its innovation capability, quality and local footprint.

It would have broad geographical reach, extending to over 20 countries worldwide. Equans and the Bouygues group’s Energies & Services arm are a good fit geographically, with robust positions in the main European markets and promising opportunities for expansion in North America.

The new entity will also enjoy a dense branch network in France and Switzerland, thus bringing the business nearer to its customers.

Pooling the people of Equans and the Energies & Services arm of the Bouygues group would create a team of around 96,000 united by common values, constantly striving to offer customers the highest quality in service and innovation.

The deal would generate numerous attractive long-term career opportunities within the Bouygues group’s business segments, both in France and internationally. Employees will have access to a high-quality skills development and training programme.

Furthermore, the Bouygues group pledges to carry out no compulsory redundancies in France and Europe for at least five years from the deal’s date of the completion. In addition to the 15,000-20,000 new hires required annually to cover estimated staff turnover at the new entity, the Group also commits to create over 10,000 net new jobs over the next five years in response to the expected strong growth in demand for the various services provided by Equans.

Bouygues cares about helping young people into work, and so the Group will implement a scaled-up plan to recruit people to apprenticeships and work/study programmes, committing to hiring at least 2,000 apprentices in France by 2025.

Finally, Equans employees will have a strong incentive to drive value creation within the new entity via the phased alignment of employee benefits (welfare schemes, employee share ownership plans, and voluntary/compulsory profit-sharing) on those already offered by Bouygues.

Martin Bouygues, Chairman of Bouygues, said: “The signing of a purchase agreement with Engie to acquire Equans is very good news! It paves the way for us to create a new global leader in multi-technical services, with strong roots in France. We will extend a warm welcome to the 74,000 Equans employees, who will be joining a group with a reputation for strong ethical values and high-quality labour relations. ”

Olivier Roussat, CEO of Bouygues, welcomed the deal: “I am delighted that Engie has accepted our offer. 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. The acquisition of Equans by Bouygues is a project that creates value for customers, for employees, and for shareholders. This activity will become a new standalone business segment within the Bouygues group, and will be the largest in terms of headcount and sales. This is the biggest acquisition Bouygues has ever made, and all our people will pull together to make it a success.”

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