Bouygues and Engie have signed a purchase agreement according to which Bouygues has agreed to acquire all of the Equans group. 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 EUR 16 billion) and number of employees (around 96,000).
Bouygues’ firm and binding offer values 100% of Equans at EUR 7.1 billion on an enterprise value basis. The proposed transaction will translate into a EUR 7.0 billion reduction in ENGIE’s economic net debt.
Creation of a major global player in multi-technical services, strongly rooted in France, delivering optimum customer service via highly complementary geographical/technical profiles and enhanced innovation capacity
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.
Equans would offer services right across the value chain, underpinned by the respective strengths and expertise of the two groups:
- Equans is well positioned in electrical engineering and telecoms via Ineo, in climate control via Axima, and in multi-technical installations via Fabricom. Equans also has renowned expertise in some specialised segments such as public transport, process industries, and the defence and marine industries.
- Bouygues Energies & Services specialises in telecoms, transport, and energy infrastructure, alongside facilities management and industrial/property maintenance.
Equans and the Bouygues group’s Energies & Services arm share the same innovation culture. Pooling their talents and research expertise would help the new entity speed up the design and roll-out of sustainable solutions.
Opportunities for the 96,000 employees of the new entity, who will be at the heart of the Bouygues group’s project
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 s 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.
Strong value creation
Equans will be aiming to generate a mid-term current operating margin of over 5%. This will be achieved by rolling out an operational efficiency drive within the new entity.
The potential for synergies (at current operating profit level) related to the deal is estimated, under normal operating conditions, at between EUR 120 and EUR 200 million per year according to the scenarios. The vast majority of those synergies are in procurement.
The deal will also be significantly accretive for Bouygues group earnings per share in year one.
Conditions and timescale for completing the deal
The deal has already been approved unanimously by the relevant employee representative bodies within the Bouygues group (Bouygues SA, Bouygues Construction and Bouygues Energies & Services, and the Bouygues European Works Council).
The process of informing and consulting the employee representative bodies of Engie and Equans will be conducted in accordance with the relevant legislation.
Completion of the deal is subject to the finalisation of the constitution of Equans’ business scope and to the customary suspensive conditions, particularly regulatory clearance (control procedure of ownership percentages and foreign investment controls in the jurisdictions where Equans operates).
Final completion of the deal is expected by the second half 2022.
ENGIE to focus on renewables
This is a major step forward in ENGIE’s execution of its strategic plan presented in May 2021 towards building a simpler ENGIE that is focused on accelerating investment in its core activities, notably in Renewables, to achieve the Group’s climate ambition of Net Zero including all 3 scopes by 2045.
“The compelling offers that we received are a testament to Equans’ global leadership in multi-technical services. By joining Bouygues, Equans, under the leadership of Jérôme Stubler, will benefit from the strong growth of its underlying markets. I am so proud of what has been achieved by ENGIE in just a few months, thanks to the extraordinary commitment of our teams.
This is a major milestone in the execution of our strategy, aimed at simplifying the Group and accelerating investment in our core businesses, notably in Renewables,” Catherine MacGregor, CEO of ENGIE said.
Jérôme Stubler, CEO of Equans, commented: “I am extremely proud of the Equans teams, their skills, their commitment and their success over the past few months. I thank them for that. I am delighted with the industrial project, the creation of a world leader and the social commitments of Bouygues, as well as the promising prospects that are opening up for Equans.”
“Today’s announcement is fully in line with the Group’s strategic orientation announced by the Board in July 2020. The Equans teams will join a group which will enable them to seize numerous development opportunities. ENGIE will benefit from important means to accelerate the implementation of its strategy. We are convinced that this step is positive for all stakeholders and sets the foundation for long-term growth of ENGIE,” Jean-Pierre Clamadieu, Chairman of the Board of ENGIE, added.