Dive Brief:
- Confirming industry rumors, Canadian engineering and design firm Stantec Inc. announced it intends to buy Colorado-based water system design-build company MWH Global Inc. for $795 million cash, according to the Engineering News-Record.
- Industry experts said this deal will give Stantec a beefed-up international presence, as MWH has 187 offices in 26 countries, including the U.K., Europe, Australia, New Zealand and the Middle East. The purchase has been approved for a May closing by both companies’ boards and will increase Stantec’s current staff of 15,000 by 6,800.
- In 2015, Stantec’s gross revenue was $2.2 billion, and MWH’s was $1.32 billion. MWH made two appearances on ENR’s 2015 list — number two among global water treatment design firms and a top-five placement in wastewater treatment. The company also has an international presence in water resources infrastructure, as evidenced by its recent work on the Panama Canal.
Dive Insight:
"You can now see the plates shifting in a more dramatic and accelerated way toward a new global competitive landscape for design services," an unidentified industry financial consultant told ENR. Experts said the fact that MWH’s is so large but isn't in the public market has made it more difficult for the company to have success in global operations.
ENR reported that MWH has been in the market for a buyer due to declining profits and lack of ability to purchase retiring employee stock. But, depending on the source, according to ENR, the $795 million cash purchase is either a great deal for Stantec or more than it should have paid, given the alleged risks inherent in MWH’s stable of construction projects.
Stantec has been on an acquisition spree in the last several months. In February, the company announced its planned purchase of Chicago architectural firm VOA Associates via a stock deal. VOA will take on the Stantec name, but the parties have not disclosed any other details of the purchase. VOA has worked on several signature Chicago projects, including a Wrigley Field overhaul, the Chicago Shakespeare Theater at Navy Pier and the Lucas Museum of Narrative Art.
And in November, Stantec also announced a $19 million purchase of Houston engineering and construction firm KBR’s Infrastructure Americas business — its transportation, water/wastewater and aviation division. Infrastructure Americas serves the Gulf Coast areas of Texas and Alabama and, as acquisitions usually do, is expected to increase Stantec’s presence in those regions.