US-headquartered Stantec Inc. has today announced that it has entered into a definitive merger agreement to acquire MWH Global, Inc. for US$793 million – around £550 million.

With the acquisition of MWH and its 6,800 worldwide employees, Stantec said it will gain a position as a global leader in water resources infrastructure while earning greater presence in key targeted geographies, including the United Kingdom, Australia, New Zealand, South and Central America, Europe and the Middle East.

Under the terms of the all-cash deal, unanimously approved by the boards of directors of both companies, Stantec will acquire all of the issued and outstanding capital stock of MWH for a purchase price of approximately US$793 million – approximately £550 million - after taking into account the estimated assumed net indebtedness of MWH.

Commenting on the deal, Bob Gomes, Stantec president and chief executive officer said:

“MWH brings a global presence and reputation in water infrastructure that will advance Stantec’s position as a top-tier design firm within the highly attractive global water market.”

“Together, we share a commitment to our communities and have the combined talent to support the most technically advanced clients and projects locally and around the world.”

MWH has a network of approximately 187 offices in 26 countries. The firm has a history of engaging in engineering, construction and management consulting for some of the most technically significant water and natural resources projects in the world, including the Panama Canal Third Set of Locks Project.

Alan Krause, MWH chairman and CEO added:

“We are excited to join the expertise and experience of Stantec and MWH in a transaction that will enable us to thrive and grow amidst an increasingly complex industry landscape by strengthening our combined ability to solve the most pressing water, transportation and infrastructure challenges today.”.  “Our highly complementary cultures, shared approach to client service and extended global reach should yield multiple benefits for our clients, employees and the communities we serve.”

Key members of the management team of MWH, including the presidents of key business units, will be joining Stantec in significant leadership positions after the acquisition goes through. Alan Krause and David Barnes, MWH chief financial officer, are committed to joining Stantec after the acquisition to ensure a smooth and successful integration.

The acquisition is aligned with Stantec’s growth strategy of building a top-tier presence in the markets it chooses to serve. Historically, Stantec’s acquisition strategy has been focused on acquisitions in North America to develop a mature presence across its business portfolio. Specifically, the acquisition is expected to create a global leader in water and infrastructure markets.

Deal will build on Stantec's position in global water market

The combined company is anticipated to build on Stantec’s position as a top-tier design firm within the global water market. A statement confirming the acquisition said:

“The strong brand, reputation and enhanced service offerings of the combined company are expected to strongly position Stantec to compete throughout the full project life cycle on the most technically sophisticated water-related projects in the world.”

Expand Stantec’s geographic footprint

MWH’s existing strong position and experience in international markets through its platform in the United Kingdom, Australia, New Zealand, South and Central America, Europe and the Middle East is expected to provide Stantec with immediate geographic breadth, creating a platform for expansion and diversification.

.The deal is also expected to deliver enhanced cross-selling capabilities to different end markets.

The engineering and technical services offered by MWH to the Energy and Industry sector are expected to add global capabilities in water-related design services to Stantec’s key hydro-power, oil & gas, mining, and industrial clients.

The global client portfolio of MWH is also expected to generate opportunities for Stantec’s Energy & Resources business operating unit to cross-sell its engineering services and provide clients with a broader enhanced service offering through the complete project life cycle.

Both companies believe that the engineering and construction sector will continue to consolidate and that both scale and global capabilities will be important competitive differentiators, particularly on large and complex projects.  The combined company is expected to be” well positioned to grow both organically and by acquisition in the future.”

The deal is also expected to add water-related construction capabilities - the construction capabilities of MWH have grown in response to its clients’ desires to have fully-integrated service offerings for the water market. MWH has a diverse range of construction capabilities, with the majority of the capabilities being construction management at-risk performed on water-related projects in the United States and the United Kingdom.

Management expects that the combined company will be able to build upon the strength of the construction capabilities of MWH and have the ability to further meet the needs of Stantec’s existing water clients.

In addition, the expertise available within the MWH construction business is expected to augment and improve Stantec’s consulting services business by allowing it to better prepare for and execute on design-build projects with other construction partners in both the water markets and other sectors in which Stantec participates in design-build projects.