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Dive Brief:
- Canadian infrastructure giant WSP offered to buy Dallas-based Jacobs for a sum of $1 billion, according to an Oct. 24 StreetInsider report that cited an unidentified source.
- Jacobs hired investment bank Centerview Partners to review the WSP offer, which had both a stock and cash component, but was mostly stock, according to a research note by Baird financial analyst Andrew Wittmann.
- WSP’s offer 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.
Diving knowledge:
Wittmann wrote that he found the report credible, given WSP’s aggressive M&A history and its ambition to “build the world’s largest platform”.
That is, earlier this month Montreal-based WSP completed the acquisition of its UK headquarters the Ricardo engineering consultancyaccording to a press release. This followed a June announcement that WSP purchased healthcare and life sciences consultancy Lexicaalso based in the UK
Both deals followed a string of recent acquisitions by WSP, including the addition of $1.78 billion Power engineers based in Hailey, Idaho in 2024.
Despite that history, Wittmann offered a note of caution about the overall outlook for the deal to be consummated.
“The timing feels off given the operational improvements, not the degradation of Jacobs’ results,” Wittmann wrote. “Despite WSP’s M&A success, M&A at scale in E&C has been scrutinized in the past, tempering our enthusiasm, with high integration risk.”
He also wrote that swallowing Jacob whole could be a mammoth task. Jacobs separated his government services unit in 2023 and has faced what Wittmann called a decade of integration, restructuring and reorganization of acquisitions.
“Another merger could be tough on the organization,” Wittmann wrote. “Perhaps their employees are already used to it. We see it as a net risk.”
Wittmann also said that WSP had previously looked at AEC monoliths in the United States. He referred to aa Bloomberg report as of January 2020 that WSP made overtures to AECOM, a transaction that would have been the Canadian company’s largest deal at the time. The COVID-19 pandemic derailed those talks.
Even with the hurdles, Wittmann pointed to aspects that would make sense for a potential transaction, including cost synergies beyond duplicate corporate structures, Jacobs’ presence in the booming water infrastructure market and its experience in advanced manufacturing and life sciences construction.
Along these lines, Wittmann did not completely eliminate the possibility of a possible merger.
“The two management teams known for / experienced making big deals, so it could certainly happen,” Wittmann wrote. “Less clear if it should happen.”
