WSP Global Inc., Montreal, has agreed to buy Berger Group Holdings Inc., parent of the group of companies operating under the umbrella name of Louis Berger, a Morristown, N.J..-based international professional services firm, for $400 million.
The long-rumored sale of Berger, at a multiple of about 8.9 times earnings, now is set to close in the fourth quarter. It would add about 5,000 employees to the global giant's staff, with about 70% in the U.S., the firms said on July 30. WSP has 43,000 global employees, it said.
The company acquired Parsons Brinckerhoff in 2014 for about $1.4 billion and bought Ontario engineer MMM Group Ltd. for $320.5 million a year later. Several other acquisitions have followed, including Norwegian MEP design specialist UnionConsult in March.
WSP ranks at No. 6 on ENR's list of The Top 150 Global Design Firms, reporting about $4.1 billion in global revenue in 2017.
Louis Berger ranks at No. 49, reporting $731 million in global revenue last year, 44% in transportation work, 25% in the power sector. and 11% in environmental related work. About $80 million of the total is outside the U.S.
The firm, which reported an additional $236 million in global construction management for fee revenue last year, and $68 million in global program management revenue, according to ENR rankings this year, also boosts WSP's share in the U.S. federal market.
Click here for more detail on the deal agreement announcement.
Louis Berger CEO James Stamatis told ENR that he and WSP senior leadership "have not had those discussions yet" as to his new role and title in the combined firm. He also did not confirm whether, or to what degree, staff layoffs would be part of the firms' announced $15 million in cost synergies by the end of the first year of the merged company. "Our goals include not only retaining Louis Berger employees but also continuing to attract the best talent in our industry," he said.
Privately-owned Louis Berger now is set to be part of publicly-traded WSP, with Canadian pension funds Canada Pension Plan Investment Board and Caisse de dépôt et placement du Québec having major ownership stakes.
Stamatis says the firm "has made significant improvements to our governance, controls and our board over the past few years as we’ve worked to reform the company." He adds, "while we’re not publicly traded, we’ve developed our culture and migrated toward a publicly traded company mindset from many perspectives so I don’t foresee significant issues."
There was interest from both equity and industry-specific buyers, "but more strategics were interested," says one source knowledgable about the deal.
According to industry sources, the deal was set to be announced at the end of last year but was "shelved," says one, linked to continuing US Justice Dept. "monitorship" of the firm's compliance with a 2015 government settlement in a past overseas bribe scheme involving several former company executives.
That monitoring has been "terminated," says the WSP-Louis Berger announcement.
WSP President and CEO Alexandre L’Heureux said the deal will provide the intended parent with a stake in market sectors and geographies it "had targeted for growth."
WSP "will focus on integrating U.S. operations and other regions," and pursue continued restructuring of Louis Berger international operations already in process, expecting to incur about $50 million in one-time integration and restructuring costs, he added.