Acquisitions
Design Giant WSP to Buy Power Engineers Inc. in $1.8B Cash Deal
Montreal-based WSP says the purchase of the Idaho-based power and transmission specialist Power Engineers Inc. will boost its energy business, particularly in the U.S., and compliment its work in other sectors.
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Montreal-based engineering and professional services giant WSP Global Inc. is looking to grow its global energy transition impact with the $1.78-billion purchase of Hailey, Idaho-based Power Engineers Inc., a leading power sector design firm, the companies announced Aug. 12.
The acquisition, set for completion in the fourth quarter, would provide WSP strategic benefits that will "expand our ability to help clients and communities ... adapt to the changing energy landscape," said President and CEO Alexandre L’Heureux, in a statement. “By uniting WSP’s extensive global network and Power’s deep technical expertise, we are poised to provide exceptional solutions and service quality."
WSP, which is publicly traded in Canada, also expects the purchase to complement its work in transportation and infrastructure, property and buildings, and water and environment sectors. The firm ranks at No. 4 on ENR's list of the Top 150 Global Design Firms, with 2023 total revenue of $8.28 billion, about 9% in the power sector. Its New York City-based unit WSP USA ranks at No. 5 on ENR’s Top 500 Design Firms with power sector work generating 12% of its domestic revenue last year.
Power Engineers ranks at No. 26 on the Top 500, posting $864.4 million in 2023 revenue, with about 4,000 employees and many leading investor-owned utilities as clients. Holger Peller, president and COO of Power Engineers, would lead WSP’s existing global power and energy business as part of a blended unit that would operate under the Power brand. Peller joined Power as a substations engineer in the 1990s. The firm also engineers manufacturing plants in food and beverage and semiconductor sectors, among others, and has worked on projects beyond North America.
Current CEO Jim Haynes would become a WSP advisor when the deal closes.
WSP has made a number of acquisitions in recent years, including the $1.1-billion purchase of Golder in 2020 and the $1.8-billion buy of Wood Group’s environmental and infrastructure consulting business in 2022.
Holger Peller, COO, Power Engineers Inc.It said it plans to finance the all-cash deal for Power Engineers with new term loans and raise the equivalent of about $730 million selling stock.
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The acquisition target also needed an infusion of cash to sustain growth as a number of major shareholders "decided to exit the company," said one executive source close to the transaction. He said Power Engineers also weighed an initial public offering and equity firm ownership.
In a statement, Power Engineers said WSP, which went public in 2006, "is hugely committed to retaining our talented team members."
But integration of the 4,000-person firm with its long-term employee ownership into the culture of the now publicly held, 70,000-person WSP has its skeptics within the firm, said the executive source. Power Engineers negotiated terms of no layoffs, but the prospective buyer "baked in cost synergies" of $25 million, he added, also wondering how long WSP will retain the Power Engineers brand.
WSP said it plans to pay incentive awards totaling up to $170 million to “a significant number of employees” after three years.
The deal is pending approval by Power Engineers shareholders and regulators. Power expects to hold a special meeting for its shareholders to vote by about Sept. 6. The companies said owners of 83% of Power shares had already agreed to support the deal.
"Power will be fantastically accretive to WSP, one of the best multiple deals in the industry," said the source, but he added that the transaction could be "troubling for employees, 80% of whom are not shareholders."
