Speculation late last week from a Wall Street online media platform that industry giant WSP Global Inc. is looking to acquire major industry player Jacobs Inc. makes industry analysts and executives see the potential deal as plausible, but could also lead to market overlap and cost synergy risk.
According to an Oct. 26 note to investors from Baird Equity Research, Street Insider reported Oct. 24, citing unnamed sources, that Montreal-based WSP approached Dallas-based Jacobs “for a largely equity-financed combination,” saying the latter has hired Centerview Partners “as a banking advisor.” No further details of the transaction were disclosed. Baird’s lead construction sector analyst Andrew Wittmann estimates a 75%-25% stock-cash split, “unless WSP raises the capital in cash” from its investors.
The combination could create a company of about 120,000 employees, which he called “unprecedented.”
The companies did not comment on the speculated deal, but WSP CEO Alexander L’Heureux told Canada. Globus and Mail last year that “For what will be required in terms of investment in digital transformation in the coming years, I think you need size.” He added: “If there was a big opportunity, we’re clearly open for business.”
Both companies have a long history of growth through acquisition. Last year, WSP acquired US-based engineering firm Power Engineers, adding 4,000 employees and a strong power sector market capability to its offerings. The US market now accounts for about 40% of WSP’s net sales.
“WSP’s M&A track record has been comparatively more successful in terms of performance than other consultants/engineers.” Wittmann said.
WSP’s other major acquisitions include the $2.3 billion purchase of U.K.-based Wood Group’s environmental and infrastructure division in 2022 and the $1.4 billion purchase of Canada-based Golder Associates in 2021. WSP was also reported to have been in talks in 2020 to buy AECOM, which would be its largest business, but stalled due to the COVID-19. Jacobs completed a merger of its Mission Critical Solutions and Cyber & Intelligence businesses with consultant Amentum in 2024, forming a separate company that is now listed on the New York Stock Exchange.
“Both companies have tailwinds with fundraising trends and public works in attractive global sectors such as mission critical, water, energy, etc. You could end up seeing the first combined company with a market cap of more than $50 billion with a formidable international presence,” an analyst said.
According to Wittmann, an acquisition of Jacobs would improve cost synergies and margins for the two companies, and contribute to WSP’s “greater market presence in water infrastructure where [it] has less scale in an above-average growth market.” WSP would also benefit from Jacobs’ larger position in the advanced manufacturing and life sciences market, “largely absent from [its] offers.” One industry executive sees water as a steady “but not explosive” market, noting that neither company has the design and construction capabilities that might be needed.
In an Oct. 26 note, National Bank of Canada analyst Maxim Sytchev said the WSP connection would give Jacobs’ business “deeper international reach,” but cautioned that “the potential combination echoes the speculation that surrounded the WSP-AECOM transaction, with similar discussions about the scale, fit and structure of the deal.” Wittmann added that the two companies’ large overlapping transportation and infrastructure practices offer “de-energy potential.”
Both companies “have had a lot of experience in integration/restructuring/reorganization acquisitions,” said Wittmann, who rates WSP’s track record as “above average.” But he described the potential acquisition “as a net risk” to Jacobs’ current profitability trend, “so the timing seems off.”
The analyst added that with two veteran negotiators, the transaction “could certainly happen. It’s not clear if it should happen.”
