In a move designed to bulk up its presence in the United States and other markets and push further into the transport sector, one of the world’s top 20 design and engineering service firms is set to acquire a significant rival in a deal worth more than $US1.2 billion.
In its latest announcement, Montreal based engineering and construction outfit WSP Group said it had entered into an agreement with UK based infrastructure giant Balfour Beauty Plc to acquire the entire stock of New York based building and infrastructure group Parsons Brinckerhoff and its subsidiaries for an enterprise value of $1.245 billion.
With revenues of around $US924 million (2013) and around 13,500 workers spread over five continents, Parsons ranked 22nd in Engineering News Record’s recent listing of the world’s largest design firms by revenue (WSP ranked 16th) and has a strong presence in areas such as transport, power, energy, community development, water, mining and environmental services.
In July, one of the projects it helped design involving the rehabilitation of a pier in Buffalo was awarded the 2013 Project of the Year by the Western New York Branch of the American Public Works Association.
In June, meanwhile, the firm was named Employer of the Year by the Portland chapter of WTS International.
In a statement, WSP President and Chief Executive Officer Pierre Shoiry said the deal would help WSP - which earlier this year closed deals to nab French engineering outfit TPS as well as Alberta based oil and gas outfit Focus Group and in June announced the purchase of Australian based structural engineering services group Wynyard - to become one of the largest ‘pure play’ service firms in the industry and would provide a ‘significant cornerstone for growth’.
This is especially the case in the United States, where Parsons has about five times the presence of its acquirer (judging by staff numbers) and is particularly strong in transport, an area in which WSP has traditionally not been as strong.
He adds that with WSP’s expertise in buildings and Parsons in infrastructure, the two companies shared complementary blends of expertise, limited overlap in operations and compatible cultures.
Parsons Chief Executive Officer George Pierson will step down from his role but become a member of the board of the newly merged company.
The transaction, which will be financed through a $502 million public offering and a $400 million placement, remains subject to approval by Balfour Beatty shareholders, major lenders and regulatory authorities.