WSP Global Inc.WSP-T +1.99%increasehas struck a deal to acquire U.S. consulting firm Power Engineers Inc. as the Canadian engineering giant bulks up its capabilities in the North American energy sector.
Montreal-based WSP will pay US$1.78-billion in cash for Hailey, Idaho-based Power Engineers and take on its 4,000 employees, according to the terms of the agreement announced after market close Monday.
Employee-owned Power has a proven track record doing business with the most prominent utilities on the continent, WSP said in a statement. Its revenues are almost entirely generated within the United States, with over 90 per cent of this revenue coming from repeat business.
“The acquisition will mark a transformative step that will position us at the forefront of the energy transition,” WSP Chief Executive Alexandre L’Heureux said in the statement. “This opportunity brings forth a wealth of strategic benefits.”
WSP said it expects the acquisition to drive accelerated growth and that it will be immediately accretive to its adjusted net earnings per share. It will finance the deal through a combination of new terms loans and stock sales.
The Canadian engineering company said it intends to launch a public offering of subscription receipts worth about $500-million in a bought deal led by CIBC Capital Markets, National Bank Financial and RBC Dominion Securities as joint book-runners. It is also selling $500-million of shares through private placements with four of its major shareholders, namely GIC Pte. Ltd, Caisse de dépôt et placement du Québec, British Columbia Investment Management Corp., and a subsidiary of Canada Pension Plan Investment Board.
“Through this investment, CDPQ is reaffirming its long-standing commitment to WSP, allowing the company to carve out an influential position in the global power and energy industry and contribute to the transition underway” Kim Thomassin, executive vice-president at the Caisse, said in a statement. The pension fund manager’s financial pledge is worth $158-million.
The global energy landscape makes this transaction all the more timely, Mr. L’Heureux said on a conference call Monday. Large utilities invested nearly $171-billion last year alone to modernize their aging infrastructure and decarbonize their operations, he said.
Mr. L’Heureux had hinted a deal was coming, telling analysts on an earnings call last month that it was eyeing larger acquisitions after a string of smaller takeovers over the past 18 months. The CEO said he saw opportunities for growth in Europe, Australia and the United States, and that it didn’t matter for WSP’s prospects who won the U.S. presidency in November.
WSP’s backlog of work booked but not yet complete stood at $14.7-billion at the end of June, an all-time high.
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