Companies
WSP Global Buys Wood's Environmental Unit in $1.8B Deal
The deal aligns with the firm's previously stated ambitious strategic plan to rapidly boost its environmental services.
Illustration by Scott Hilling for ENR
Global design and professional services giant WSP Global Inc. has secured a $1.8-billion deal to purchase the environment and infrastructure consulting business of Wood Group, enabling it to add 5,500 employees for a workforce total of about 20,000 and $830 million in revenue for its earth and environmental practice, the Montreal-based firm said.
The purchase value of the transaction, which is set to close in the fourth quarter, represents around 14.6 times the earnings before interest, taxes, depreciation and amortization (EBITDA) of Wood’s environment and infrastructure (E&I) business, WSP Global said in its June 1 announcement.
As part of the firm's previously stated ambitious strategic plan to rapidly boost its environmental services, the deal checks a lot of boxes for the firm to position itself as a leader in the clean energy transition, says André-Martin Bouchard, WSP Global director, earth & environment.
The firm says it aims for its earth and environment practice to account for one-third of its global annual net revenue by 2024, and the deal more than doubles the firm’s presence in the U.S., increasing its access to federal, state and local government entities as they receive project funding from the new US Infrastructure Investment and Jobs Act.
WSP Global ranks No. 1 on the latest ENR Top 225 list of International Design Firms, with its American arm, WSP USA, ranking at No. 7 on the latest ranking of Top 500 Design Firms. Wood ranks at No. 6 on ENR's 2022 Top 500 Design Firms list.
In December 2020, WSP acquired large employee-owned environmental and earth sciences specialist Golder for about $1.14 billion. Bouchard explains that similar to that purchase, Wood’s E&I business “will fit in our existing platform very well,” increasing the firm’s capabilities in the water sector, which now represents around $650 million in annual revenue globally.
WSP Global also ranks at No. 8 on the 2021 ENR Top 200 Environmental Firms list, but its listing did not include revenue from Golder. Wood ranks at No. 16 on that list.
Looking for quick answers on construction and engineering topics?
Try Ask ENR, our new smart AI search tool.
Ask ENR →
For UK-based Wood, the deal comes at a time when the company needs more financial flexibility to remove debt liabilities and refocus its strategy on becoming a leader in energy security and sustainability. The transaction will “deliver significant value for our shareholders” and enable the company to “move onto our next strategic phase with the financial flexibility” said Wood CEO Robin Watson., who announced he would be stepping down.
According to one industry executive with knowledge of the acquisition, at least two private equity firms were also finalist buyers. Other industry firm contenders had dropped from the bidding or were eliminated, he said.
While the executive says the two firms’ clients are not “significantly overlapping,” he sees some overlap in their respective businesses in North America.
Wood says it is focused on five key areas: energy security, carbon intensity reduction, industrial decarbonization, resourcing the energy transition and low carbon energy.
Navia Sharma, the company’s vice president of marketing and communications, says discussions began last year on how to “best unlock value” from Wood’s E&I arm that the company believes “was not being recognized in its market capitalization.”
In 2017, Wood acquired rival Amec Foster Wheeler, also UK based, for around $2.7 billion. AMEC had previously acquired Foster Wheeler in $3.2-billion deal.
Joe Sczurko, executive president of the E&I consulting business, noted "WSP’s growth story, excellent capabilities, focus on clients and the future aspirations for its business." His future title in the combined company was not disclosed.
