Two Planned Acquisition Deals Go Cross-Border
International linkups prompted two big acquisition deals, announced on Oct. 14. U.K. testing and inspection firm Intertek Group said it would purchase its smaller, Illinois-based peer Professional Services Industries for $330 million to gain a foothold in U.S. construction, while California water giant Tetra Tech is taking advantage of the favorable currency exchange in agreeing to buy Australian engineer Coffey International Ltd. for $79 million.
Intertek said the purchase of the 2,400-employee PSI “builds scale in the U.S. construction market, which has significant growth potential.” New CEO André Lacroix noted PSI’s strong positions in building and transportation inspection and non-destructive pipeline testing. PSI reported $254 million in 2014 revenue; Intertek in August said its half-year revenue of $1.6 billion was up 1.4%, despite oil-and-gas impacts. Noting that PSI was bought by a private- equity firm for $50 million in 2005, “this was a handsome return,” an analyst told ENR.
Coffey would add 3,300 to Tetra Tech’s 13,000-person global workforce, with particular expertise in Asia-Pacific geotechnical services and project management. “The bid comes as the weak Australian dollar has made it very compelling for TetraTech,” said Canada-based industry research analyst Maxim Sytchev on Oct. 15. The two firms are previous project collaborators. Coffey reported revenue of about $403.6 million for its year that ended June 30 but has been cutting costs with the falloff in mining work. Sytchev said the offer was a 130% premium on Coffey’s Oct. 14 share price. Both deals could close by year-end, but there were no details given on management integration.
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