AtkinsRealis Group (TSX: ATRL), formerly known as SNC-Lavalin, is exiting the Canadian toll road business. The company this morning indicated it has entered into an agreement to sell the last of its stake in 407 International, the entity that owns the 407 Highway in the Greater Toronto Area.
The transaction will see AtkinRealis’ remaining 6.76% interest in the entity sold to off for gross proceeds of $2.79 billion. Comparatively, in 2019, the company sold off a 10.01% interest to a company controlled by the Canada Pension Plan Investment Board for $3.0 billion.
The sale will take place in two parts, with an initial 5.06% interest to be sold to Ferrovial, a Spanish multinational based in Madrid. 3.30% will be sold under a share purchase agreement, while the remaining 1.76% interest will be sold under a put and call option agreement, with the latter to be in place for an 18 month period. The 5.06% interest will be sold for $2.09 billion, which will change slightly depending upon when the option is exercised.
The final 1.70% interest in Highway 407 will be sold to CPP investments, in exchange for $700 million in cash. CPP has 18 months to pay the purchase price, with the purchase price to be adjusted based upon when final payments are made.
The transactions are conditional upon CPP Investments sale of a 7.51% interest in Highway 407 to Public Sector Investment Board being completed. The transaction is currently slated to close in Q2 2025.
Proceeds from the sale are expected to be used to pay down debt, potentially fund growth through small and mid-sized acquisitions, and potentially to return capital to shareholders.
AtkinsRealis last traded at $64.66 on the TSX.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
