Looking to expand its stake in the expanding U.S. and global water-resources market, Dutch engineering giant ARCADIS NV will acquire one of the sector’s few remaining midsize players, 114-year-old Malcolm Pirnie Inc. The White Plains, N.Y., engineer would become a wholly owned subsidiary of ARCADIS’ Denver-based U.S. arm, adding 1,700 employees and $392 million in 2008 revenue to its $2-billion-plus parent’s girth.

ARCADIS, based in Arnhem, the Netherlands, said on June 25 it will finance the transaction with a combination of stock and $135 million in cash. The purchase price was not disclosed, but the deal is set to close this month, says ARCADIS. It says Pirnie shareholders owning 48% of its stock “have provided irrevocable support” of the transaction. ARCADIS says the combined entities’ global water market revenue “approaches” $500 million, about 17% of the corporate total.

“Clean-water availability and water quality are increasingly important issues. In order to capitalize on the expected strong growth in this market, water will become a separate business line within ARCADIS,” says CEO Harrie Noy. He adds that Pirnie’s strong federal and municipal market share would balance its parent’s strength among private-sector clients. “Together, we are well positioned to benefit in the short-term from the government stimulus package,” says Noy.

“We’ve been discussing the need to expand our global reach for some time.”

— William Dee, Malcolm Pirnie CEO

Pirnie is ranked 31 on ENR’s 2008 list of the Top 200 Environmental Firms, with nearly 65% of its 2007 revenue in water and wastewater markets and 80% for federal and state-local clients. ARCADIS’ U.S. unit reported 70% of its 2007 revenue in the waste-remediation sector, with 76% for private-sector clients. While ARCADIS says Pirnie is active internationally in Asia, the Middle East and Latin America, the firm did not report any non-U.S.-based revenue in the 2008 Top 200 survey.

William P. Dee, Malcolm Pirnie president and CEO, says the firm had been “discussing the need to extend our global reach for some time.” He says ARCADIS expands its new unit’s skills in environmental, transportation and building sector arenas. Among the Dutch firm’s recent U.S. acquisitions over the last few years is Baltimore-based architect RTKL.

Dee says he does not anticipate layoffs or office consolidations in the new blended firm. He says Pirnie will maintain its identity, and he will continue in his current position as will “all of our existing leadership.” Dee says “cost-cutting is not a goal or a strategy being implemented.”

Company and industry sources say Pirnie’s agreement to an acquisition was a surprise to many employees, but others claim the firm was in negotiations with ARCADIS for some time. “They were on our doorstep for a while,” says one.

Others say the transaction is fairly lucrative under current economic conditions. “It is a reasonable deal, but not a steal,” says one industry consultant. ARCADIS has been successful in integrating other acquired firms, but some caution about culture issues. “Malcolm Pirnie is closer to a practice than a business, so this will be an internal shock,” says one industry consultant.