Three acquisitions in three months | WSP in accelerated mode

Alexandre L’Heureux openly admits that the last six months have been particularly busy while WSP’s CEO has been conducting negotiations that have made it possible to complete three major acquisitions since June and to shift its workforce from 57,000 to 70,000 professionals worldwide at the same time Expanding his expertise in the field of earth and environmental sciences.

Posted at 6:30am

In the Strategic Plan 2022-2024 presented last March, the company stated that it aims to reach the 10 billion mark in net revenues by 2024. Once the transactions are complete, this goal could be achieved as early as this year, according to the engineering firm’s pro forma results.

Earlier in June, WSP announced it had completed the acquisition of the E&I (environment and infrastructure) division of Scottish company John Wood for a price of 2.3 billion, suddenly adding 6,000 professionals to its global workforce and additional annual revenue of $1 billion.

Last week, WSP confirmed it had reached an agreement with British firm Capita, in a slightly more modest $160 million deal, to acquire its Capita REI and GLH divisions, which specialize in engineering and management consulting services. The two divisions employ around 1,000 people in the UK.

Finally, on Monday evening, WSP announced that it had reached an agreement with RPS Group to acquire all shares in the British company, which employs 5,000 people worldwide and is mainly active in the consulting sector, in a 975 million transaction.

With these three acquisitions, we just increased our workforce by 25% by adding 12,000 additional professionals. And that’s not counting the 2,200 jobs we’ve created organically since the beginning of the year.

Alexandre L’Heureux, CEO of WSP

The RPS Group is particularly active in the environmental field and has extensive expertise in marine sciences, particularly in offshore wind farms and wastewater treatment, be it for the industrial or municipal sector.

“These transactions contribute to the transformation of WSP. We announced in 2018 that we want to become a global leader in power conversion, we have just doubled our expertise in this sector in five years. »

“Earth sciences and environment will account for more than 30% of our income, while transport and construction will account for 40% and 30% respectively, compared to 80% before,” notes Alexandre L’Heureux.

Financial Flexibility

This cascade of acquisitions within three months was made possible by WSP’s financial flexibility. Once again, the Montreal company could count on its longstanding shareholders to support it in its international expansion.

Caisse de depot et placement du Québec, Canada Pension Plan Investment Board – Investissements RPC – and Singapore’s sovereign wealth fund GIC PTE raised $400 million through a private placement, while WSP secured $400 million in public funding.

As with the John Wood transaction, we paid cash and therefore did not increase our balance sheet, which gives us all financial flexibility to potentially make further acquisitions. We have an opportunistic capital structure.

Alexandre L’Heureux, CEO of WSP

However, the CEO agrees that the company now intends to focus its efforts on integrating the newly acquired companies.

“I debated with RPS for four years, but it was never the right time. The stars were there and we were able to complete the transaction that satisfies everyone.

“For five years we changed, we went somewhere else. Today our activities are much better balanced. We make 50% of our sales from engineering design and the other 50% from consulting services. We’ve built resilience,” said WSP’s CEO.


PHOTO FRANÇOIS ROY, LA PRESSE ARCHIVE

With these recent transactions, WSP has deepened its presence in the UK, where it has become the leading engineering firm, as well as in Australia and Canada.

The next expansion could well be in the United States, where the Montreal group employs nearly 16,000 professionals, compared to 12,000 in Canada.

“The United States is 10 times the size of Canada, so it will be natural for us to increase our footprint compared to ours here,” the CEO said.

“In 2011, when I was CFO of WSP and we were raising our first private financing, I told financial analysts that one day an engineering firm could have 100,000 professionals worldwide. . I think it will happen and it could be WSP”, predicts Alexandre L’Heureux today.

A record order book

WSP also announced its second-quarter results on Tuesday, which included a record order book. This stood at 11.4 billion on July 2, which corresponds to 12.5 monthly earnings. Excluding acquisitions, the backlog showed organic growth of 19.1%. Net income decreased to 89.3 million from 120.0 million for the quarter ended July 2. The Company attributes the decrease to impairments related to the Deferred Compensation Plan for US employees and charges on leased assets. Sales rose 5% to 2.8 billion. Adjusted diluted earnings per share were $1.30. Analysts had expected earnings per share of $1.30 and revenue of $2.1 billion, according to data company Refinitiv.

The Canadian Press

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