Wood Plc to sell unit for $1.9bn

August 2022 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

August 2022 Issue

Energy services provider John Wood Group Plc has agreed to sell its built environment consulting division to Canadian firm WSP Global Inc., in a deal worth $1.9bn.

The acquisition of the Environment & Infrastructure Consulting (E&I) unit will consist of a total cash consideration of $1.81bn, including the net present value of a $200m transaction-related tax benefit. The net transaction value of $1.61bn represents 14.6 times E&I’s estimated 2022 pre-IFRS 16 earnings before interest, taxes, depreciation and amortisation (EBITDA), or 11.5 times post-synergies.

The deal is expected to be completed in the second half of 2022, subject to certain customary closing conditions, including the approval of Wood’s shareholders, completion by Wood of a group reorganisation to achieve separation of the E&I business, and applicable regulatory conditions.

“We are very pleased to have agreed this sale with WSP,” said Robin Watson, chief executive of Wood. “This transaction will deliver significant value for our shareholders and marks a new chapter for Wood. It enables us to move onto our next strategic phase with the financial flexibility to accelerate our strategy to capture the growth opportunities ahead across both energy security and sustainability. We are focused now on the steps to complete this deal and in further developing our strategy, which we will outline in detail at a capital markets day, when my successor as chief executive is in place”.

“The acquisition of Wood’s E&I business will directly contribute to the realization of the ambitions we set out in our 2022-2024 Global Strategic Action Plan,” commented Alexandre L’Heureux, president and chief executive of WSP. “WSP’s leading Global Earth & Environment Consultancy will now have approximately 20,000 experts globally with increased capabilities and reach, including key expertise in the high growth water sector and an expanded offering to federal and government clients. Our platform will be increasingly diversified and resilient, with increased scale in geographies which we have identified for growth such as the United States, where our E&E team will double in size. We look forward to having the team from E&I join us as we expand our leadership in Earth & Environment together.”

“Throughout this process, I’ve been impressed with WSP’s growth story, excellent capabilities, focus on clients and the future aspirations for its business,” said Joe Sczurko, executive president of E&I. “I’m incredibly proud of what our team has accomplished to get here, and I look forward to the new opportunities that will be created for our employees and clients by joining WSP.”

The sale comes around six months after London-listed Wood began a strategic review of the business, which employs 5500 consultants serving the government, transportation, water, energy, mining and industrial sectors. The firm said the net proceeds of the sale will be used to reduce debt. It would have been in a net cash position at the end of December 2021 if the proceeds from this disposal were included rather than having net debt of $1.4bn as previously reported. Wood also noted that the proceeds of the sale would improve its financial flexibility and allow it to consider further options, such as restoring an ordinary dividend payment to shareholders.

The deal is said to be aligned with WSP’s long-term vision, adding $830m of net revenue and expanding on WSP’s stated goal of achieving greater than C$10bn in net revenues by 2024. It significantly increases WSP’s presence in Organisation for Economic Co-operation and Development (OECD) countries, such as the US, Canada and the UK. The deal will also more than double WSP’s Earth & Environment practice in the US and enhance its scale and capabilities in the water sector, which is now expected to represent a total of C$830m in annual revenues globally.

Richard Summerfield