Mergers & Acquisitions
AtkinsRéalis Buys Majority Stake in David Evans Enterprises in $300M Deal
Montreal-based firm gains 70% majority share in US engineer with intent to acquire full ownership at a later date
“Together our two firms significantly enhance our geographic footprint and capabilities in a core growth market, aligning with our US Land and Expand strategy,” said AtkinsRéalis President and CEO Ian Edwards.
Logos courtesy of AtkinsRéalis
Montreal-based AtkinsRéalis has inked a $300-million deal to buy a 70% stake in Portland, Ore.-based David Evans Enterprises, with plans to fully acquire the professional services consulting firm at a later date, the company announced Feb. 18.
The cash transaction, which David Evans’ shareholders must approve, gives AtkinsRéalis a majority stake in the 1,250-person employee-owned company and is expected to close in the second quarter.
“Together our two firms significantly enhance our geographic footprint and capabilities in a core growth market, aligning with our US ... strategy,” said AtkinsRéalis President and CEO Ian Edwards in announcing the purchase. The investment also is a springboard to grow the two firms' west coast service offerings, he said.
The deal is the first “significant acquisition” for the company since its predecessor firm SNC-Lavalin purchased U.K.-based engineer Atkins in 2017, Edwards said.
David Evans has 34 offices in 10 states and generates more than 50% of its revenue, $275 million in 2024, in the transportation sector. The company also offers services in power, water and environment, surveying and geomatics engineering as well as in staffing services. The company ranks at No. 109 on the ENR Top 500 Design Firms list, with 64% of revenue in transportation and also lists among ENR’s Top 100 Pure Design firms.
AtkinsRéalis, which rebranded in 2023, ranks at No. 9 on ENR’s 2024 Top 150 Global Design Firms list and No. 5 on the 2024 Top 225 International Design Firms list.
The link between the two firms "is aligned with our strategic vision and leverages our exceptional professional services in the Western United States and beyond,” said David Evans' Chairman and CEO Al Barkouli in a statement. He noted the firms' "highly complementary geographical footprints and technical expertise."
Company employees will retain a minority stake, with the firm continuing to operate as a separate legal entity and its leadership team remaining in place, it said.
"AtkinsRealis management has previously signaled that it is open to M&A – especially in the attractive U.S. market – and the acquisition is a first (and likely not last) foray in that direction," said Maxim Sytchev, an analyst at National Bank of Canada in a Feb. 18 note. The David Evans buy adds "significant U.S. scale to AtkinsRealis' presence in the space [and] exposure to the thematically attractive water, environment and power/energy space," he noted.
"We expect a more aggressive cadence of M&A," Sytchev said, once the company sells its stakes in a company that owns the Highway 407 toll road north of Toronto, expected by the end of 2027, and in the Linxon JV with Hitachi Energy that focuses on electrical substations, with both announced in 2024. AtkinsRealis reported an adjusted loss of $2.1 million from Linxon in its third quarter but did not comment on when the sale process will complete.
The AtkinsRealis commitment of "incremental capital to M&A is suggesting the rest of the mothership has to be operating well in order for management to spend time on integration, Sytchev said. "We still believe that a much bigger deal in the U.S. would be coming following the 407 ETR divestiture."
AtkinsRealis posted profitable second and third-quarter results last year, and is set to announce those for year end and fourth quarter on March 13.
