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
Industry Research | Jun 15, 2023
Exurbs and emerging suburbs having fastest population growth, says Cushman & Wakefield
Recently released county and metro-level population growth data by the U.S. Census Bureau shows that the fastest growing areas are found in exurbs and emerging suburbs.
Engineers | Jun 14, 2023
The high cost of low maintenance
Walter P Moore’s Javier Balma, PhD, PE, SE, and Webb Wright, PE, identify the primary causes of engineering failures, define proactive versus reactive maintenance, recognize the reasons for deferred maintenance, and identify the financial and safety risks related to deferred maintenance.
University Buildings | Jun 14, 2023
Calif. State University’s new ‘library-plus’ building bridges upper and lower campuses
A three-story “library-plus” building at California State University, East Bay (CSUEB) that ties together the upper and lower campuses was recently completed. The 100,977-sf facility, known as the Collaborative Opportunities for Research & Engagement (“CORE”) Building, is one of the busiest libraries in the CSU system. The previous library served 1.2 million visitors annually.
Resiliency | Jun 14, 2023
HUD offers $4.8 billion in funding for green and resilient building retrofit projects
The Department of Housing and Urban Development (HUD) recently released guidelines for its Green and Resilient Retrofit Program (GRRP) that has $4.8 billion for funding green projects.
Arenas | Jun 14, 2023
A multipurpose arena helps revitalize a historic African American community in Georgia
In Savannah, Ga., Enmarket Arena, a multipurpose arena that opened last year, has helped revitalize the city’s historic Canal District—home to a largely African American community that has been historically separated from the rest of downtown.
Building Materials | Jun 14, 2023
Construction input prices fall 0.6% in May 2023
Construction input prices fell 0.6% in May compared to the previous month, according to an Associated Builders and Contractors analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices declined 0.5% for the month.
Mass Timber | Jun 13, 2023
Mass timber construction featured in two-story mixed-use art gallery and wine bar in Silicon Valley
The Edes Building, a two-story art gallery and wine bar in the Silicon Valley community of Morgan Hill, will prominently feature mass timber. Cross-laminated timber (CLT) and glulam posts and beams were specified for aesthetics, biophilic properties, and a reduced carbon footprint compared to concrete and steel alternatives.
Mixed-Use | Jun 12, 2023
Goettsch Partners completes its largest China project to date: a mixed-used, five-tower complex
Chicago-based global architecture firm Goettsch Partners (GP) recently announced the completion of its largest project in China to date: the China Resources Qianhai Center, a mixed-use complex in the Qianhai district of Shenzhen. Developed by CR Land, the project includes five towers totaling almost 472,000 square meters (4.6 million sf).
Drone Software | Jun 12, 2023
Drones take site assessments to new heights
Eric Vallejo, Director of Reality Capture and Geospatial Solutions, IMEG Corp., discusses strategies for using visualization and reality capture.
Engineers | Jun 12, 2023
Stantec to acquire Environmental Systems Design
Stantec, a global leader in sustainable design and engineering, has signed an agreement to acquire Environmental Systems Design, Inc. (ESD), a 270-person engineering firm headquartered in Chicago. Founded in 1967, ESD has built a reputation for excellence and innovation in high-performance design with a roster of industry-leading clients. The terms of the transaction are not disclosed.