Montreal's WSP strikes deal to buy Britain's Ricardo for $670-million
WSP is offering to pay 430 pence per share in a deal worth 363.1-million pounds including debt (about $670-million at current exchange rates), the Montreal-based company said in a statement Wednesday. That's a takeover multiple of 10.4 times earnings before interest, taxes, depreciation and amortization in 2024 for Ricardo's continuing operations, WSP said.
WSP said it has won support for the deal from all of Ricardo directors as well as major shareholders representing about 48 per cent of Ricardo's issued share capital. It will pay for the takeover with a new 230 pound ($425-million) loan facility arranged by Royal Bank of Canada as well as cash on hand and existing credit.
The acquisition is only the latest in a wave of deals by the WSP as chief executive Alexandre L'Heureux reshapes what was once a boutique engineering business into a company with a global reputation and multipronged capability. Its market capitalization now stands at about $36-billion.
The industry is consolidating as projects become larger and more complex while design companies – which include engineering and architecture outfits and planners – navigate technological change, the CEO has said. That could present more opportunities, he said.
Ricardo, which employs about 2,700 people, has been shifting its business in recent years toward a focus on environment and energy services such air quality and water management in addition to rail and mass transit. It also has another business unit in automotive and industrial services that will likely be sold, WSP said.
'We are constructive on the proposed transaction at first blush as it is set to accelerate WSP's expansion in targeted high-growth areas,' Raymond James analyst Frederic Bastien said. Ricardo also comes at a reasonable price and appears to match up well with WSP's existing operations, he said.
WSP, perhaps best known for its transportation projects and super-skinny skyscrapers, last year won the largest contract in its history. It will provide its expertise for Britain's Great Grid Upgrade, the biggest overhaul of the electricity network in England and Wales in decades.
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