Dive Brief:
- Canadian infrastructure giant WSP offered to buy Dallas-based Jacobs for a multi-billion-dollar sum, according to an Oct. 24 report from StreetInsider that cited one unidentified source.
- Jacobs hired investment bank Centerview Partners to review WSP’s bid, which had both a stock and cash component but consisted mostly of stock, according to a research note from Baird financial analyst Andrew Wittmann.
- WSP’s bid may not lead to an actual deal, according to the StreetInsider article. Neither WSP nor Jacobs immediately responded to a request for comment from Construction Dive.
Dive Insight:
Wittmann wrote that he viewed the report as credible, given WSP’s history of aggressive M&A and its ambition to “create the world’s largest platform.”
To wit, earlier this month, Montreal-based WSP completed the acquisition of U.K.-headquartered engineering consultancy firm Ricardo, according to a news release. That came on the heels of a June announcement that WSP bought healthcare and life sciences consulting firm Lexica, also based in the U.K.
Both of those deals followed a string of recent WSP acquisitions, including the $1.78 billion addition of Hailey, Idaho-based Power Engineers in 2024.
Despite that history, Wittmann offered a note of caution on the overall outlook for the deal to be consummate.
“Timing feels off given operational improvements, not degradation in Jacobs’ results,” Wittmann wrote. “WSP's M&A success notwithstanding, scale M&A in E&C has checkered past, tempering our enthusiasm, with integration risk high.”
He also wrote that swallowing Jacobs whole could be a gargantuan task. Jacobs spun off its government services unit in 2023 and has faced what Wittmann called a decade of acquisition integration, restructuring and reorganization.
“Another merger could be tough on the organization,” Wittmann wrote. “Perhaps its employees are used to it by now. We see it as a net risk.”
Wittmann also said that WSP has eyed U.S.-based AEC monoliths previously. He referred to a Bloomberg report in January of 2020 that WSP made overtures to AECOM, a transaction that would have, at the time, constituted the Canadian firm’s largest deal ever. The COVID-19 pandemic derailed those talks.
Even with the hurdles, Wittmann pointed out aspects that would make sense for a potential transaction, including cost synergies beyond just duplicative corporate structures, Jacobs’ presence in the booming water infrastructure market and its expertise in advanced manufacturing and life sciences construction.
Along those lines, Wittmann didn’t completely write off the chance of a potential merger.
“Both management teams known for/experienced doing large deals, so it certainly could happen,” Wittmann wrote. “Less clear if it should happen.”
