While the U.K.’s largest contractor Balfour Beatty plc. has finally shut the door on merger talks with leading rival Carillion, the bidding war for London-based design firm Hyder Consulting has ignited between ARCADIS N.V., Amsterdam, and Japan's Nippon Koei, with the Dutch firm raising its offer by 12.3% on Aug. 21.
Having recommended acceptance of Arcadis’s original offer in late July, Hyder directors changed their preference a few days later when Nippon Koei offered a 4.6% better bid.
The Japanese are now pondering their next move after ARCADIS secured Hyder support for its new offer, valuing the London firm at $478 million.
Hyder employs some 4,500 staff generating sales of around $500 million.
Over half of its business is in transportation infrastructure with buildings and utilities each accounting for about 20%, and environmental work making up the balance.
But even as its bid for Hyder remains in play, ARCADIS has moved to acquire Seattle-based global architect and design firm Callison. That deal, whose terms were not disclosed, is set to close in the third quarter, says Callison in an Aug. 25 announcement.
Callison ranks at No. 73 on ENR's list of The Top 500 Design Firms, with $160.9 million in 2013 revenue including $88 million gained from non-US operations. It also is ranked 15th among the Top 300 architect ranked by Architectural Record.
ARCADIS says the firm's addition will provide a larger position in China and in mixed-use and commercial design. Callison has 1,000 employees.
Back in the UK, Balfour Beatty is settling down to improve its domestic construction operations, which had generated the profit warnings leading to Carillion's merger proposal early this summer. After making a series of marginally improving financial offers, Carillion gave up after Balfour Beatty’s Aug. 20 final rejection.
Balfour Beatty directors are determined to press on with the sale of the firm’s design subsidiary, New York City-based Parsons Brinckerhoff, to which Carillion had objected, seeing the unit as a valuable entity to retain for future growth.
Spokespersons for PB and for Montreal-based WSP Global, however, declined to comment on Aug. 22 on press and market speculation that the Canadian professional services firm is the front-runner to buy the U.S. firm for a price the Financial Times estimated at about $1.2 billion.
WSP indicated to investors in June that it intends to become a 45,000-person entity by 2020 and it was looking for "quality assets" and especially, a "transformational acquisition" in the U.S. where it is "substructure," according to one executive.The firm reported 9% of its 2013 revenue from the U.S.
The firm boosted its cross-Canada capabilities earlier this year with the purchase of Calgary-based oil and gas engineer Focus Holdings, which followed the 2012 deal that involved the purchase of UK-based WSP by the much-smaller Montreal firm, Genivar.
Former Genivar CEO Pierre Shoiry now runs the combined firm.
"With WSP clearly being in a 'build' mode and the high quality nature of [PB's] platform, the strategic rationale for establishing a very significant footprint in the US makes a lot of sense, in our view," said Maxim Sytchev, construction sector lead analyst for Dundee Capital Markets, Toronto, on Aug. 20.
He noted PB revenue of $2.74 billion in 2013, and an estimated margin of about 4%, impacted by weakness in Australia, but also offering a strong transportation and globally-diverse professional services platform.
"With the success of other large scale transactions under WSP's belt and the quality of [PB's] platform, we believe WSP's investment thesis would be strengthened if [the] acquisition is successful."
According to British published reports, UK-based Atkins also is believed to be a contender for PB and that New Mountain Capital is among private equity firms also interested.
Sources say a deal could be inked before mid-September.