Montreal-based engineering giant WSP Global Inc. is looking to increase its impact on the global energy transition with the $1.78 billion purchase of Hailey, Idaho-based Power Engineers Inc., a leading company in electrical sector design, the companies announced on August 12.
The acquisition, expected to close in the fourth quarter, would bring strategic benefits to WSP that will “expand our ability to help customers and communities … adapt to the changing energy landscape,” the president and CEO said Alexandre L’Heureux, in a statement. . “By bringing together WSP’s extensive global network and Power’s deep technical expertise, we are poised to deliver exceptional solutions and quality of service.”
WSP, which is publicly traded in Canada, also expects the purchase to complement its work in the transportation and infrastructure, property and buildings, and water and environment sectors. The company ranks fourth on ENR’s list of the world’s top 150 design companies, with total revenue by 2023 of about $8.28 billion, about 9% in the power sector. Its New York City-based WSP USA unit is ranked No. 5 on ENR’s Top 500 Design Firms, with the electrical sector generating 12% of its national revenue last year.
Power Engineers ranks No. 26 on the Top 500, with revenue of $864.4 million by 2023, with about 4,000 employees. Holger Peller, president and COO of Power Engineers, would lead WSP’s global power and energy business as part of a mixed unit that would operate under the Power brand. Peller joined Power as a substation engineer in the 1990s.
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 purchase of Wood Group’s infrastructure and environmental consulting business in 2022.
leatherIt said it plans to fund the all-cash deal for Power Engineers with new term loans and raise the equivalent of about $730 million in equity sales.
The acquisition target also needed an infusion of cash to sustain growth as a number of major shareholders “decided to exit the company,” an executive source close to the transaction said. He said Power Engineers also explored an initial public offering and equity firm ownership.
But integrating the 4,000-person, long-term employee-owned company into the culture of the 70,000-person WSP publicly has its skeptics within the company, the executive source said. Power Engineers negotiated terms without layoffs, but the potential buyer “made cost synergies” of $25 million, he added, also wondering how long he will retain the Power Engineers brand.
WSP said it plans to pay incentives totaling $170 million to “a significant number of employees” after three years.
The deal is pending approval by Power shareholders and regulators. Power expects to hold a special meeting for its shareholders to vote around September 6. The companies said owners of 83 percent of Power’s shares had already agreed to support the deal.
“The power will increase fantastically at WSP, one of the best multiple deals in the industry,” the source said, but added that the transaction could be “concerning for employees, 80% of whom are not shareholders.”
