Acquired nearly $2.3 billion for WSP Global

Montreal consulting-engineering giant WSP Global is gaining ground in the environmental market in America and Europe by acquiring a sector division of Scottish firm John Wood plc for $1.8 billion.

Posted at 8:00 am

Martin Vallieres

Martin Vallieres
The press

This CA$2.27 billion transaction, paid for in cash by WSP, will add just over CA$1 billion to its annual net income. WSP is thus getting closer to its strategic goal of exceeding the threshold of 10 billion net annual sales within two years.

According to its President and Chief Executive Officer, Alexandre L’Heureux, “the acquisition of [la division] John Wood’s E&I will directly contribute to the goals set out in our Global Strategic Action Plan 2022-2024.”

“WSP’s global earth science and environmental advisory service will now employ approximately 20,000 people. Our platform [en environnement] is becoming increasingly diverse and resilient. It will have a stronger presence in regions we have identified for growth, such as B. The United States, where the size of our earth and environmental science team will double. »

Joe Sczurko, Chief Executive Officer of E&I at John Wood plc, said he was “impressed by his company’s history of growth, outstanding skills, customer focus and future aspirations.

As a result, he says he’s “excited about the new opportunities that will come within him [ses] employees and to [ses] customers as a result [son] Merger with WSP”.

On the stock market, meanwhile, investors in WSP stock welcomed the announcement of another major acquisition, which has been anticipated since the company’s mid-term business plan was recently updated.

Shortly after Wednesday morning’s announcement, the market value of WSP shares surged more than 8% to cross the $150 threshold. At the close of the session, WSP was trading at $146 a share on the Toronto Stock Exchange, up 5% from Tuesday.

At that level, WSP’s market value is up about 12% from its one-year low of $130 per share hit in mid-May. However, this market value remains well below the historic high of $187 per share reached in mid-November 2021.

Well received by analysts

Among analysts keeping an eye on WSP, Benoit Poirier of Desjardins Securities in Montreal, in a note to his investor clients, states that he is “pleased with WSP’s announcement of this strategic acquisition because it should strengthen its presence in the United States Conditions; a promising market that will benefit from the deployment of the US government’s infrastructure program.”

For his part, Maxim Sytchev of Montreal’s National Bank Financial believes that “this acquisition demonstrates once again WSP’s ability to find high quality assets with high value potential to add to its business plan, regardless of the macroeconomic context”.

According to Mr. Sytchev “Investors [en actions de WSP] should appreciate this transaction as it will expand WSP’s capabilities in the environmental sector to become one of the world’s leading engineering consultancies in this sector”.

Mark Neville, Analyst at Scotia Capital, says he “likes the business logic of this acquisition for WSP for these key reasons: It significantly expands WSP’s business in the high-growth environmental and water utility market; it adds a very complementary customer base across levels of government in the United States (state, federal, etc.) and large industrial Fortune 500 companies; it will balance WSP’s business across different markets, geographies and customer pools.”

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