Montreal-based engineering and professional services giant WSP Global Inc. seeks to increase its impact on the global energy transition with the $1.78 billion purchase of Hailey, Idaho-based Power Engineers Inc. , a leading energy design firm, the companies announced in 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 top 150 global design companies, with total revenue of $8.28 billion by 2023, about 9% in the power sector. Its New York City-based WSP USA unit is ranked No. 5 in ENR’s Top 500 Design Firms, with work in the electrical sector generating 12% of its national revenue for the year past
Power Engineers ranks No. 26 in the Top 500, with revenues of $864.4 million by 2023, with approximately 4,000 employees and many leading investor-owned utilities as clients. 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. The firm also designs manufacturing plants in the food and beverage and semiconductor sectors, among others, and has worked on projects beyond the Americas from the North
Current CEO Jim Haynes would become a consultant to WSP when the deal closes.
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.
Holger Peller, COO, Power Engineers Inc.It 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 weighed an initial public offering and ownership by an equity firm.
In a statement, Power Engineers said WSP, which went public in 2006, “is very committed to retaining our talented team members.”
But integrating the 4,000-person company with its long-term employee ownership into the culture of the now-public 70,000-person WSP 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.”
