Canadian engineering giant WSP Global Inc. WSP-T is walking away from its planned purchase of British environmental consulting firm RPS Group PLC after a rival swooped in with a higher bid.
Montreal-based WSP said Tuesday that it will not be revising its offer for RPS and that the bid and its related financing will lapse. The company said it values a disciplined approach to acquisitions and is confident that its strong balance sheet will allow it to act on future opportunities as they arise.
WSP announced in August that it had struck a deal to buy RPS for £2.06 ($3.14) a share in cash for a total enterprise value of £625-million ($955-million). The takeover would have brought additional scale to WSP, adding 5,000 employees and boosting its expertise in environmental engineering and consulting services.
A month later, U.S. rival Tetra Tech Inc. offered £2.22 ($3.39) a share in a deal that values RPS equity at £636-million (about $972-million at current exchange rates). Tetra had locked up support from investors holding about 28 per cent of RPS shares.
Maxim Sytchev, an analyst at National Bank of Canada, said the disciplined execution of mergers and acquisitions has long been a hallmark of WSP’s management team and that investors should applaud this decision.
“Considering the quality of RPS assets, the deteriorating macro backdrop and precedent multiples in the engineering and construction space, we believe WSP’s original offer represented a fair price,” Mr. Sytchev said in a note Tuesday.
Nicolas Van Praet