The engineering giant Stantec is looking to gain a global foothold in water resources infrastructure through its definitive agreement to acquire MWH Global, a Broomfield, Colo.-based engineering, consulting, and construction management firm.
This is the biggest deal in Stantec’s 62-year history, according to the Edmonton Journal. Stantec confirms to BD+C that, if consummated, the acquisition would boost its annual revenue by 56% to 4.5 billion Canadian dollars (the equivalent of US$3.47 billion).
With 6,800 employees and 187 offices in 26 countries, MWH would also give Stantec a bigger presence in key markets that include the United Kingdom, Australia, New Zealand, South and Central America, and the Middle East. With this merger, Stantec—which is based in Edmonton, Alberta—would be generating 70% of its annual revenue from outside of Canada.
“It’s really a step into another era for us,” Bob Gomes, Stantec’s CEO, told the Journal. “But I don’t want to call it transformational because that sounds risky and it sounds like it’s lucky or it just happened. This is a firm we’ve known for a number of years.”
In this agreement, which both companies’ boards have signed off on, Stantec is paying cash for MWH’s stock. After taking into account assumed debt (estimated to equal 9.5 times MWH’s adjusted cash flow for 2015), the value of this deal is expected to be around US$795 million.
Stantec is financing the merger with equity financing—which includes a C$525 million public offering of 17.36 million subscription receipts priced at C$30.25 each—along with its C$800 million revolving credit facility, and C$450 million in non-revolving debt. CIBC World Markets and RBC Dominion Securities are underwriting the equity offer.
(Acquiring companies sometimes prefer offering subscription receipts—which automatically entitle the holder to receive the equivalent security of the buyer once the acquisition closes—to ensure they have the cash needed to complete the deal in advance of closing.)
Through synergies that would include leveraging its existing back-office functions, Stantec expects the merger produce savings of about $25 million annually by 2017. Neither company provided cost-saving details.
Stantec's growth strategy under CEO Bob Gomes is to expand its global footprint and diversity its services platforms. Image: Edmonton Journal
Stantec, which before this agreement had more than 15,000 employees in over 250 locations worldwide, says the rationale for this acquisition revolves around a growth strategy that positions the company to expand its geographic footprint beyond North America and to diversify its services platform.
MWH has worked on some of the more technically complex water and natural resource projects in the world, including the Panama Canal Third Set of Locks project. Hydroworld.com notes that MWH has been involved as well in the development and rehabilitation of numerous hydroelectric projects worldwide, such as Pakistan’s 102-MW Gulpur and 4,500-MW Diamer Bhasha dams, Malaysia’s 1,400-MW Baleh, and Argentina’s 1,890-MW Salto Grande.
Stantec expects this combination to build on MWH’s position as a prominent design firm within the global water market.
“The Engineering and Technical Services offered by MWH to the Energy and Industry sector are expected to add global capabilities in water-related design services to Stantec’s key hydro-power, oil and gas, mining, and industrial clients,” the company said in its prepared statement about the acquisition.
Stantec went on to speculate that MWH’s global client portfolio should generate cross-selling opportunities for Stantec’s Energy & Resources and Buildings & Environmental Services businesses.
Members of MWH’s management team, including presidents of key business units, will be joining Stantec after the acquisition closes. MWH’s chairman and CEO Alan Krause, and its CFO David Barnes, are also joining Stantec, although their roles and titles have not been announced publicly yet.
Barnes told the Boulder (Colo.) Daily Camera that MWH had spent much of the past year evaluating its capital structure and its ability to grow as an employee-owned firm. From that analysis, he said that MWHs managers concluded that merging with a larger, publicly traded entity would give it access to much-needed capital.
This deal still must be approved by at least two-thirds of MWH’s shareholders, who will vote on it in April. The acquisition also requires government approval. If all goes as planned the acquisition should be completed by the second quarter of this year.
Related Stories
Codes and Standards | Apr 30, 2024
Updated document details methods of testing fenestration for exterior walls
The Fenestration and Glazing Industry Alliance (FGIA) updated a document serving a recommended practice for determining test methodology for laboratory and field testing of exterior wall systems. The document pertains to products covered by an AAMA standard such as curtain walls, storefronts, window walls, and sloped glazing. AAMA 501-24, Methods of Test for Exterior Walls was last updated in 2015.
MFPRO+ News | Apr 29, 2024
World’s largest 3D printer could create entire neighborhoods
The University of Maine recently unveiled the world’s largest 3D printer said to be able to create entire neighborhoods. The machine is four times larger than a preceding model that was first tested in 2019. The older model was used to create a 600 sf single-family home made of recyclable wood fiber and bio-resin materials.
AEC Innovators | Apr 26, 2024
National Institute of Building Sciences announces Building Innovation 2024 schedule
The National Institute of Building Sciences is hosting its annual Building Innovation conference, May 22-24 at the Capital Hilton in Washington, D.C. BI2024 brings together everyone who impacts the built environment: government agencies, contractors, the private sector, architects, scientists, and more.
Mass Timber | Apr 25, 2024
Bjarke Ingels Group designs a mass timber cube structure for the University of Kansas
Bjarke Ingels Group (BIG) and executive architect BNIM have unveiled their design for a new mass timber cube structure called the Makers’ KUbe for the University of Kansas School of Architecture & Design. A six-story, 50,000-sf building for learning and collaboration, the light-filled KUbe will house studio and teaching space, 3D-printing and robotic labs, and a ground-level cafe, all organized around a central core.
Sports and Recreational Facilities | Apr 25, 2024
How pools can positively affect communities
Clark Nexsen senior architects Jennifer Heintz and Dorothea Schulz discuss how pools can create jobs, break down barriers, and create opportunities within communities.
Senior Living Design | Apr 24, 2024
Nation's largest Passive House senior living facility completed in Portland, Ore.
Construction of Parkview, a high-rise expansion of a Continuing Care Retirement Community (CCRC) in Portland, Ore., completed recently. The senior living facility is touted as the largest Passive House structure on the West Coast, and the largest Passive House senior living building in the country.
Hotel Facilities | Apr 24, 2024
The U.S. hotel construction market sees record highs in the first quarter of 2024
As seen in the Q1 2024 U.S. Hotel Construction Pipeline Trend Report from Lodging Econometrics (LE), at the end of the first quarter, there are 6,065 projects with 702,990 rooms in the pipeline. This new all-time high represents a 9% year-over-year (YOY) increase in projects and a 7% YOY increase in rooms compared to last year.
ProConnect Events | Apr 23, 2024
5 more ProConnect events scheduled for 2024, including all-new 'AEC Giants'
SGC Horizon present 7 ProConnect events in 2024.
Engineers | Apr 23, 2024
AlfaTech names new CEO and COO appointments: Diarmuid Hartley and Tim Chadwick, PE, LEED AP
AlfaTech, a renowned leading provider of sustainable mechanical, electrical and plumbing engineering design, architectural lighting design, and technology services, proudly announces the appointment of Diarmuid Hartley as Chief Executive Officer (CEO) and Tim Chadwick, PE, LEED AP, as Chief Operating Officer (COO). These strategic appointments mark a significant step in AlfaTech's commitment to fortifying its leadership team and adapting to evolving industry demands.
75 Top Building Products | Apr 22, 2024
Enter today! BD+C's 75 Top Building Products for 2024
BD+C editors are now accepting submissions for the annual 75 Top Building Products awards. The winners will be featured in the November/December 2024 issue of Building Design+Construction.