WSP Global Inc. has 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 the firm based in Hailey, Idaho, 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 more than 90 per cent 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 immediately add to adjusted net earnings. It will finance the deal through a combination of new term 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.
In a statement, Kim Thomassin, executive vice-president at the Caisse, said the pension fund manager’s $158-million investment allows WSP to “carve out an influential position in the global power and energy industry” and contribute to the transition under way.
The global energy landscape makes this transaction 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 U.S., and that it didn’t matter for WSP’s prospects who won the White House 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.