ARCADIS, the international consultancy, design, engineering and management services company, announced June 25 that it has signed a merger agreement to acquire 100 percent of the shares of Malcolm Pirnie, a White Plains, N.Y., based company predominantly active in water and environmental consulting and engineering, currently owned by about 80 internal shareholders. At closing, Malcolm Pirnie will be a wholly-owned subsidiary of ARCADIS U.S. Malcolm Pirnie has more than 1,700 employees, 2008 gross revenues of $392 million, net revenues of $294 million and profitability close to ARCADIS overall target EBITA margin of 10 percent.

ARCADIS will finance this merger by issuing 5.74 million shares to present Malcolm Pirnie shareholders and key employees, in addition to a cash amount of $135 million, for which ARCADIS has secured a new debt facility from Rabobank, ING and RBS. The merger is contingent on Malcolm Pirnie shareholder approval and related closing requirements. It was anticipated that the merger would be completed in July 2009. The major shareholders comprising ownership of 48 percent of the outstanding shares have provided irrevocable support of the merger.

The combination of both companies is expected to generate significant business and operational synergies. Malcolm Pirnie brings an established world-class water brand, with specializations in water quality, treatment, strategic planning and project delivery. Combined with ARCADIS’ international position in water management and coastal engineering, the merger creates a major position in the global water market with annual revenues approaching $500 million, representing about 17 percent of combined revenues. Additional benefits include a significantly stronger position with the U.S. Federal Government to pursue both water and environmental projects. Malcolm Pirnie’s strong industrial environmental practice brings additional services and a complementary client base that now can be offered services through ARCADIS’ global platform. Finally, both companies have similar client-focused business models which will greatly facilitate the integration efforts that are planned for the next 18 to 24 months.

Commenting on the merger, ARCADIS CEO Harrie Noy said: “This is a major step for ARCADIS which very well fits our strategic goals. Together with Malcolm Pirnie we are in the top 10 of consulting engineers in the international water market. Clean water availability and water quality are increasingly important issues. In order to capitalize on the expected strong growth in this market, water will become a separate business line within ARCADIS. In addition, the merger brings us into the top 10 in the U.S. design, consultancy and engineering market, with a more balanced services portfolio. Also, the largely public client base of Malcolm Pirnie serves to balance our existing private sector client base in the U.S., thus contributing to long-term stability. Together we are well positioned to benefit in the short-term from the government stimulus package.”

William P. Dee, President and CEO of Malcolm Pirnie added: “We believe that this step allows Malcolm Pirnie to fulfill several strategic goals in one step. First, it will provide us rapid access to international markets, where we have a stated goal to position ourselves as a world leader in water-related engineering and consulting services. Second, it strengthens our position in the Federal market and industrial environmental market, where we can now use ARCADIS’ technology and GRiP® approach to serve our clients in more ways. Third, this offers many career opportunities for our staff to work on the most exciting challenges on a global basis, which is an important issue for future success. Our Board has unanimously recommended the merger with ARCADIS to Malcolm Pirnie shareholders.”

Noy, commenting on market circumstances, said: “Recent developments in ARCADIS are generally in line with the trends we have seen in the first quarter. The infrastructure market is robust, driven by government investments. The environmental market continues to slow as industrial clients curtail spending, however, due to strong cost management, margins are holding up. The buildings market continues to be under pressure with particularly challenging circumstances in the United Kingdom. Although the impact of the economic downturn in the short term is still uncertain, the long-term outlook for our business is positive.”

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