A Union flag is seen flapping in the wind in front of one of the faces of the Great Clock atop the landmark Elizabeth Tower that houses Big Ben at the Houses of Parliament in London on June 27, 2016.JUSTIN TALLIS/AFP / Getty Images
A relatively minor proposed takeover by Montreal-based engineering WSP Global Inc. – a $41-million friendly offer for British construction advisory business Sweett Group PLC – is turning out to be a test case for WSP's risk appetite in the newly uncertain climate following Britain's vote to exit the European Union.
WSP said on Monday it is "currently considering its options" in light of a higher, $50-million rival offer for Sweett, announced Friday, from Currie & Brown Holdings Ltd., a unit of Middle East engineering giant Dar Group.
Sweett's board has withdrawn its recommendation to vote in favour of WSP's bid. Currie & Brown has further sweetened the pot by offering Sweett a term debt facility of about $16-million, which would help offset the likelihood that Sweett will not get an extension to its Bank of Scotland borrowing facilities beyond July 8.
WSP is not commenting beyond a terse news release issued Monday, and said it plans to make an announcement "in due course" while advising Sweett shareholders to "take no action."
Whether the global engineering giant – which currently has about 5,100 employees in Great Britain – decides to engage in a bidding war against Currie & Brown remains to be seen.
"While WSP has highlighted the U.K. as a key geography for growth by acquisitions, we believe the rejection of this deal could be well received in the present volatile environment," AltaCorp Capital analyst Chris Murray said in a research note Monday.
"While Sweett was expected to add 600 employees to the company's 5,100 employees in the UK, a reduced exposure to the country in light of Brexit should somewhat mitigate investor concerns and allow management to rebase its European strategy," he said.
WSP unveiled its bid for Sweett in May, before last week's dramatic turn of events with the Leave side's unexpected win in Britain.
Prior to the Brexit vote, a WSP spokeswoman said the company was monitoring events in Britain and Europe closely and said it uses a strategy to offset potentially negative external events that includes diversifying its client base as well as the sectors and markets it operates in.
Bertrand Marotte