StantecStantec Inc. has entered into a definitive merger agreement pursuant to which it will acquire MWH Global, Inc. and its 6,800 worldwide employees.

Based in Broomfield, Colo., MWH is a global engineering, consulting and construction management firm focused on water and natural resources for built infrastructure and the environment .

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. The transaction is valued at approximately US$795 million after taking into account the estimated assumed net indebtedness of MWH.

“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,” says Bob Gomes, Stantec president and chief executive officer (CEO). “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.”

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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.

“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,” says Alan Krause, MWH chairman and CEO.  “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 closes. Alan Krause and David Barnes, MWH chief financial officer, are committed to joining Stantec after the acquisition closing date to ensure a smooth and successful integration.

Acquisition Rationale


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.

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Stantec has concurrently positioned itself to be able to execute on the right opportunity at the right time to expand its geographic footprint and service capabilities to further diversify its industry leading platform. Specifically, the acquisition is expected to:

Create a Global Leader in Water and Infrastructure Markets

Stantec

Stantec was part of the design-build team on the McOrmond Drive project in Saskatoon, which extended the existing 1,500-m sanitary and storm trunk sewer system to support a growing population.



The combined company is anticipated to build on Stantec’s position as a top-tier design firm within the global water market. 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 has a 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. This should provide Stantec with immediate geographic breadth, creating a platform for expansion and diversification. Management expects that the combination of complementary capabilities, market presence, and cultures of each of MWH and Stantec will create the opportunity to service more clients with a broader range of services, worldwide.

Enhance 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 and gas, mining, and industrial clients. The global client portfolio of MWH is expected to generate opportunities for Stantec’s energy and 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. In addition, opportunities exist to further cross-sell services out of Stantec’s buildings and environmental Services business operating units to the client base of MWH.

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Create Additional Growth Opportunities

Management believes 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. MWH brings a history and experience of operating in global markets. Augmented by Stantec’s strong balance sheet, history of operational effectiveness and experience in successfully completing and integrating acquisitions, the combined company is expected to be well positioned to grow both organically and by acquisition in the future.

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. These services are provided to the key long-term water clients of MWH. 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.

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Additionally, 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.

Result in New Opportunities for Combined Company Employees

Stantec’s purpose is “Creating Communities” and the MWH purpose is “Building a Better World”.  Together, the combined company will share a commitment to advance the quality of life in our communities around the world.

The employees of the combined company are anticipated to have the opportunity to build on that commitment by providing their expertise to more projects in more locations.  We expect this will allow the combined company to better serve its clients by drawing resources from across the globe to address each client’s specific needs.

Acquisition Approvals


The acquisition must be approved by holders of at least two thirds of the MWH shares at a special meeting of MWH shareholders expected to be held in April 2016. The acquisition is subject to certain customary conditions, including approval under the U.S. Hart-Scott-Rodino Anti-Trust Improvements Act. Stantec anticipates the acquisition to close in the second quarter of 2016.