The day began with a merger announcement and ended with Tony Williams hurrying through the streets of London, a big bunch of flowers in hand, still talking into a phone. It had been a very busy few weeks and a sleepless few nights for Amec’s director of corporate affairs. While a merger creates new corporate relationships, it can take its toll on personal ones. So the first lesson in M&A communications for IROs is: when you’re finally on your way home, don’t forget the flowers.
Amec is a leading UK capital projects group with operations worldwide and a 42 percent stake in French builder Spie. Canada’s Agra is a professional services company specializing in engineering, technology, construction and environmental solutions. Both companies had seen their major customers consolidating and were looking for global suppliers able to offer a range of services.
According to Williams, it was a natural fit from the get go. ‘There is a highly complementary set of operations, geography, skills, and most of all of culture,’ he says. ‘Our tag line is think, create, support; theirs is engineering global solutions. It’s a very similar ethos.’
Amec is purchasing Agra in a cash or share offer for C$514 mn, or C$16 a share – a handsome 46 percent premium over the share price. Under the unusual structure, Agra shareholders can choose to receive C$16 cash, Amec shares, or shares in a TSE-listed Canadian subsidiary of Amec which are exchangeable into Amec ordinary shares. They can also mix and match, and plans are in the works to interlist the Canadian company in the US, opening Amec a backdoor to the US capital pool. The new Amec-Agra company will have a combined revenue of C$8.8 bn, and all in all, it looks like a sweet deal for both companies and their shareholders.
Complementary skills
As soon as the decision was made to bed down, it was time for some serious communications strategizing. Dave Paterson, the vice president of investor relations at Agra who was named best IRO for a small-cap company at the Investor Relations Magazine Canada Awards in February, flew to London to begin the process about three weeks before the announcement. The two IROs found they too had complementary skills: Paterson is a PR veteran of Hill and Knowlton; Williams is a former analyst. Between them they came up with an innovative and techno-savvy communications plan for the merger announcement.
Their first challenge was the five-hour time difference, making it difficult to announce the merger to both audiences. They also decided that while Peter Mason, CEO of Amec, would be in Canada for the announcement, he should also be face-to-face with analysts and shareholders in London. Their solution was to issue the release at 7am GMT; hold a meeting for Amec chairman Sydney Gillibrand and London analysts at 9.30am GMT, with Mason and Agra CEO Peter Janson on a live videoconference from the Toronto Stock Exchange; another meeting for the Canadian investment community at 9am EST, with a conference call bridge; and finally a media briefing, along with a teleconference. Both analyst conferences were to be immediately posted on the web, with streaming audio and slide shows explaining the deal.
As well as the two webcasts, fact sheets on both companies and the new combined company were prepared in PDF format so they could be easily downloaded. The question was, where would all the information be posted on the web? Agra’s Paterson came up with a cutting-edge solution, one that exemplifies a new trend in M&A communications: a whole new web site dedicated to the deal, www.amec-agra.com. He says the advantage of this approach has to do with timeliness and convenience. ‘We put a separate web site together so it could be launched immediately,’ he explains. Once launched, the financial community can tune in at their convenience.
A ‘swat team’ at Toronto’s Barnes Organization, long-time IR advisor to Agra, swung into action to help make the plan a reality. Craig Armitage of Barnes, who worked with the IROs to develop the deal site, describes it as all fairly painless. The first step was to register the domain name; the rest of the process unfolded ‘with a fair amount of back and forth between our creative team here and Amec’s creative guys in London,’ explains Armitage.
Timely communication
‘It was fundamental that the deal be announced in a timely fashion to Amec’s UK shareholders,’ says Ken Barnes, chairman and CEO of the Barnes Organization. ‘The purchaser is the one with the largest obligation because they have to justify the deal to their shareholder base.’ Canadian investors, on the other hand, were facing a handsome premium and would be happy as long as they had all the information before the Canadian market opened.
Williams wryly explains the early morning London meeting thus: ‘If you are going to get a message across, particularly in an unglamorous industry like this, you have to get out there early and hit the newspapers and the analysts so they have the rest of the day to think about it.’
With the communications plan firmly in place, the IR teams bided their time and rescheduled venues as the LSE reviewed the unusual exchangeable share structure. The delay was for the best, as it turned out, with BCE’s February 15 buy-out of Teleglobe hogging the headlines. That helped make Amec-Agra the deal of the day on February 16.
Armitage, who was on site in Toronto for the 4.30am videoconference and the 9am analyst meeting, says the web component ‘ran very smoothly’ and there were few logistics to take care of during the event. Barnes agrees: ‘ It was thoroughly seamless. This is definitely the most complex event I have been involved with and it went off without a hitch.’
Paterson is also enthusiastic about the day’s events. He says the web site was helpful in communicating the announcement to Agra employees as well as the company’s analysts and shareholders. ‘The web site was a godsend. We have 6,500 employees around the world, and I didn’t want them coming to work and hearing about the merger details from their customers,’ he says. ‘It was a huge task to coordinate employee communications without violating disclosure rules. Having the dedicated web site meant they could see and hear all about it immediately.’
Who, what, why?
Investors and analysts were impressed with the announcement, not to mention the deal itself. ‘It was surprisingly well orchestrated,’ comments Richard Stoneman, vice president at Dundee Securities in Toronto, who covers industrial products and aerospace. ‘There was a detailed plan to keep investors and other stakeholders informed, so that by the time the market opened at 9.30 there was no uncertainty. Everyone knew what the deal was and who the players were.’
Ken Barnes adds that analysts were pleased with the web site because it made it easier for them to do their job. ‘All they have to do is download the materials as PDF files and send them to their clients,’ he says. ‘And the sooner they get their recommendation to clients the better it looks for them.’
In terms of the UK shareholder reaction, there was some concern that Amec might be shelling out too much. Williams admits Agra has ‘a bit of a checkered past’ but says this is offset by the company’s growth potential. Nevertheless, the London meeting included a spirited Q&A session among the 50 or so analysts in attendance; and Williams spent the afternoon fielding more questions. But by the end of the day, he says, everyone was reassured.
For Agra shareholders, ‘It’s a good deal,’ says Stoneman, who was at one time the only analyst covering Agra; today there are six. He has seen the company grow from revenues of around C$300 mn to C$1.3 bn last year. The exchangeable share structure, while unusual, is appealing to Canadian investors because it means they can own the new company while keeping their foreign exposure down.
Overall, the Amec-Agra merger announcement is a good example of strategic and effective communications. Paterson emphasizes that the deal-dedicated web site is part of IR’s technology trend: ‘Investor relations now needs all forms of communications, particularly the web, to effectively get the message across to a very narrow and select target audience.’
Barnes agrees that the way IROs communicate is changing. ‘Two years ago, you might have had an international conference call and a news release with a couple of slides attached,’ he notes. ‘Today, the investors can watch all the slides as they hear the news straight from management. It just opens up a whole new world.’
Meanwhile, is the award-winning Paterson out of a job? Far from it. His skills, as well as his location, complement those of his London counterpart. As for Tony Williams, who successfully navigated the twists of the capital markets this deal day, he turns into his lane with the flowers still intact after his dash through London, celebrating a return to something approximating normal life.
