WSP Global Inc T.WSP

Alternate Symbol(s): WSPOF

Industrials Conglomerates

WSP Global Inc. is a Canada-based professional services firm. The Company provides strategic advisory, engineering and design services to clients seeking sustainable solutions in the transportation, infrastructure, environment, building, energy, water and mining sectors. It also offers highly specialized services in project and program delivery and advisory services. Its segments include Canada, Americas (United States and Latin America), Europe, Middle East, India and Africa (EMEIA), and Asia Pacific, comprising Asia, Australia and New Zealand (APAC). It provides comprehensive technical support to the renewable energy industry. Its wind energy specialists help clients in both the onshore and offshore wind energy sectors develop systems. Its services include identification of prospective wind farm sites; resource assessment of wind power stations in high-wind-speed environments; wind power assessment studies and grid impact studies, and electrical interconnection studies.

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WSP Global Inc

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Post by retiredcfon Oct 11, 2022 11:12am

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Post# 35017228

TD

Have a $190.00 target. GLTA

WSP Global Inc.

(WSP-T) C$149.95

WSP Announces it Will Not Raise its Takeover Offer for RPS-LN Event

WSP announced overnight that it will not be revising its takeover offer for RPS Group (RPS-LN). Recall, on September 23, industry peer Tetra Tech, Inc. (TTEK-Q) announced a higher/competing acquisition offer for RPS.

Impact: MIXED

We viewed WSP's proposed acquisition of RPS positively, both strategically and financially, and we saw potential room for WSP to increase its offer for RPS. However, in our view, WSP's decision to not increase its offer highlights WSP's disciplined approach to acquisitions, which we believe investors will view positively. Further, walking away from the RPS transaction leaves WSP in a relatively stronger financial position, permitting WSP to focus on other acquisition opportunities on potentially more attractive terms (particularly if broader financial markets remain under pressure).
As a reminder, on August 8, WSP announced an agreement to acquire RPS (see our WSP Action Note) for 206 pence/share in cash. On September 23, TTEK announced a competing offer to acquire RPS for 222 pence/share in cash; a 7.8% premium to WSP's offer price (see our Flash Note). To secure the support of all shareholders who undertook to vote in favour of TTEK's offer, a revised competing offer would have needed to exceed TTEK's offer by at least 10% (i.e., been at least ~245 pence/share).
Regarding WSP's balance sheet, had it completed the RPS acquisition as originally planned, leverage (pro forma net debt to EBITDA basis) would have been ~1.9x on closing, and higher still had WSP raised its offer for RPS. However, by walking away from the RPS deal, we expect WSP's pro forma leverage to be ~1.2x (vs. management's target range of 1.0x–2.0x).
We incorporated the RPS acquisition into our WSP forecast following its announcement (assumed a December 31, 2022 closing date). On a TTM basis, RPS generated EBITDA of £52.9mm (pre-synergies, post-IFRS 16 basis), or £72.9mm (~$111mm) including expected synergies (expected to be realized over two years). For context, WSP generated TTM adjusted EBITDA of $1.4bln (does not include recently-announced acquisitions, including John Wood E&I and Capita REI/GL Hearn). We will adjust our WSP forecast as needed as part of our next comprehensive update.