WSP Global Inc. (TSX:WSP) (“WSP” or the “Corporation”) is pleased
to announce that it has reached another significant milestone of
its journey by entering into an arrangement agreement (the
“Arrangement Agreement”) providing for the acquisition (the
“Acquisition”) of all of the issued and outstanding shares of
Enterra Holdings Ltd., the holding company of Golder Associates
(“Golder”). Under the terms of the Arrangement Agreement, WSP will
acquire Golder for an aggregate cash consideration of US$1.14
billion (approximately C$1.5 billion) (the “Purchase Price”)
representing 10.4x Golder’s 2020 pre-IFRS 16 adjusted EBITDA or
8.4x post-synergies(2,4).
“Together we will create the leading Global
Environmental Consulting Firm with approximately 14,000 of our
54,000 professionals dedicated to accelerating the world’s green
transition. The combination ideally positions WSP to capitalize on
the rapidly growing ESG trends driving demand for environmental
services and sustainable infrastructure development”, commented
Alexandre L’Heureux, President and Chief Executive Officer of WSP.
“WSP looks forward to welcoming Golder’s employees and joining
forces with such a well-respected environmental consulting brand.
Golder is a global leader in earth sciences and environmental
services. This acquisition directly contributes to the realization
of the goals we laid out in our 2019-2021 Global Strategic Plan and
is expected to contribute to both strategic growth and value
creation for many years to come. Furthermore, the strategic
relationships with GIC and BCI mark another important milestone for
WSP to actively continue our acquisition strategy”, he added.
Also commenting on the Acquisition, Dr. Hisham
Mahmoud, Global President and Chief Executive Officer of Golder
said, “Over the last 60 years, Golder has been on a journey where
we have built one of the most successful and respected brands in
the industry. Combining Golder’s industry-leading expertise with
WSP’s impressive world-class platform and highly complementary
services will provide long-term benefits for our people and help
create greater value for our clients. This view is echoed and
confirmed by the overwhelming support of our Partners for the
transaction. I believe that the compatible cultures and values of
WSP and Golder will facilitate a successful integration.”
FINANCIAL
HIGHLIGHTS
-
Acquisition of Golder for an enterprise value of US$1.14B (approx.
CAD$ 1.5B) representing 10.4x Golder’s 2020 pre-IFRS 16 adjusted
EBITDA or 8.4x post-synergies(2,4).
-
Immediately accretive(2) to WSP's adjusted earnings per share(3),
with accretion(2) increasing to the mid-teens once synergies are
fully realized(4).
-
Annual cost synergies of approximately $35 million expected to be
achieved over a 24-month period with 50% to be realized within the
first twelve months after the closing date. Costs required to
realize such annual cost synergies estimated not to exceed $35
million in the aggregate(4).
-
Private placements of C$310 million of subscription receipts (at a
price of $92.98 per subscription receipt) supported by a C$260
million investment by GIC Private Limited (“GIC”), one of the
world’s largest sovereign wealth funds, with an established global
network, and a C$50 million investment by British Columbia
Investment Management Corporation (“BCI”), one of Canada's largest
institutional investors with a global portfolio of more than C$170
billion.
-
Remaining portion of the acquisition funded from a new US$960
million (approximately C$1.2 billion) underwritten bank financing,
expected to result in an estimated 1.3x pro forma net debt to
adjusted EBITDA ratio(2,4) upon closing, remaining within WSP’s
targeted leverage range of 1.0x to 2.0x.
-
Acquisition expected to be completed in the first half of the
second quarter of 2021.
_____________________________
(1) Per Environmental Business International,
Inc. Environmental Industry Study.(2) Non-IFRS measures. These
measures are defined in the “Non-IFRS measures” disclaimer
below.(3) Non-IFRS measures. These measures are defined in section
19, “Glossary of non-IFRS measures and segment reporting measures”
of the Corporation's Management's Discussion & Analysis for the
third quarter and nine-month period ended September 26, 2020.
Please refer to "Non-IFRS measures" disclaimer below.(4) Forward
looking statements. Please refer to the “forward-looking
statements” disclaimer below.
ACQUISITION FINANCING
The Acquisition and other related transaction
costs are to be funded by C$310 million private placements (the
“Private Placements”) of subscription receipts to two new global
long-term investors and a new US$960 million (approximately C$1.2
billion) fully committed bank financing with up to a 4-year tenor.
Canadian Imperial Bank of Commerce and National Bank of Canada are
acting as joint bookrunners with respect to the bank financing. The
subscription receipts will be issued at a price of C$92.98 and will
convert automatically into common shares of WSP upon closing of the
Acquisition.
Arjun Khullar, Head of GIC’s Integrated
Strategies Group, shared, “GIC is thrilled to partner with WSP, a
true market leader with a strong management team and robust track
record of creating value for all of its stakeholders. As a
long-term investor, we firmly believe in the strategic merits of
this transaction and are confident the sector will continue to
flourish as businesses increasingly look to improve their
sustainability practices. We look forward to future opportunities
to expand our relationship with WSP as it continues to pursue its
strategic ambitions."
“We are impressed with WSP’s world class global
and environmental advisory platform and look forward to supporting
its expansion”, said Jean-René Adam, Vice President, Active
Portfolio Management, Public Markets, BCI. “This is a strong
company for our clients’ public markets portfolio and is aligned
with our strategy for seeking value-add opportunities from
ESG.”
CONDITIONS TO THE
ACQUISITION
The Acquisition, which is expected to be
completed through a plan of arrangement, remains subject to certain
customary closing conditions, including (i) Court approval, (ii)
shareholder approval by not less than 75% of the votes cast by
shareholders, voting as a single class, at a special meeting of
Golder shareholders, and (iii) applicable regulatory approvals. The
special meeting of the Golder shareholders to consider and vote on
the Acquisition is expected to be held on or about January 13, 2021
(the “Special Meeting”). The Acquisition is expected to be
completed in the first half of the second quarter of 2021 (the
“Acquisition Closing Date”).
Approximately 99% of Golder’s Partners in
conjunction with Golder Employee shareholder Trust, which hold
together approximately 82.8% of all Golder shares outstanding, have
entered into voting and support agreements with WSP to vote in
favour of and support the Acquisition.
The Arrangement Agreement provides for a
customary non-solicitation covenant on the part of Golder, which is
subject to customary "fiduciary out" provisions in effect before
the Special Meeting and a right in favour of WSP to match any
superior proposal. WSP will receive a termination fee of US$25
million should Golder support any superior proposal.
FINANCIAL AND LEGAL
ADVISORS
National Bank Financial Inc. is acting as sole
financial advisor to WSP on the Acquisition. Legal advice is being
provided to WSP by Stikeman Elliott LLP, Hogan Lovells US LLP in
the United States and Stewart McKelvey in Nova Scotia. Legal advice
is being provided to Golder by Osler, Hoskin & Harcout LLP, and
Cox & Palmer LLPin Nova Scotia.
CONFERENCE CALL
WSP will host a conference call to discuss the
Acquisition today, December 3, 2020 at 11:00 a.m. (Eastern Standard
Time). To participate in the conference call, dial 1-647-427-2309
or 1-866-521-4907 (toll free). A live webcast of the conference
call will also be available at www.wsp.com/investors. For those
unable to attend, a replay will be available within 24 hours
following the call.
ABOUT WSP
As one of the world’s leading professional
services firms, WSP provides engineering and design services to
clients in the Transportation & Infrastructure, Property &
Buildings, Environment, Power & Energy, Resources and Industry
sectors, as well as offering strategic advisory services. WSP's
global experts include engineers, advisors, technicians,
scientists, architects, planners, environmental specialists and
surveyors, in addition to other design, program and construction
management professionals. Our talented people are well positioned
to deliver successful and sustainable projects, wherever clients
need us. For more information about WSP, please visit wsp.com.
ABOUT GOLDER
Founded in 1960 and headquartered in
Mississauga, Ontario, Golder is a private, employee-owned
engineering and consulting firm with 60 years of experience in the
geo-sciences sector; an engineering niche focused on earth and
environmental conditions. Golder provides engineering, remediation,
regulatory & compliance, design and environmental services to
clients in the mining, manufacturing, oil & gas, power and
infrastructure industries. Golder operates in 155 offices with
approximately 7,000 employees across more than 30 countries
globally.
ABOUT GIC
GIC is a leading global investment firm
established in 1981 to manage Singapore’s foreign reserves. A
disciplined long-term value investor, GIC is uniquely positioned
for investments across a wide range of asset classes, including
equities, fixed income, private equity, real estate and
infrastructure. GIC invests through funds and directly in
companies, partnering with its fund managers and management teams
to help world-class businesses achieve their objectives. GIC has
investments in over 40 countries and has been investing in emerging
markets for more than two decades. Headquartered in Singapore, GIC
employs over 1,700 people across 10 offices in key financial cities
worldwide. For more information about GIC, please visit
www.gic.com
ABOUT BCI
With C$171.3 billion of assets under management
as of March 31, 2020, British Columbia Investment Management
Corporation (BCI) is one of Canada’s largest institutional
investors. Based in Victoria, British Columbia, BCI is a long-term
investor that invests across a range of asset classes: fixed
income; public equities; private equity; infrastructure; renewable
resources; real estate; and commercial mortgages. BCI’s clients
include public sector pension plans, insurance, and special purpose
funds. For more information about BCI, please visit www.bci.ca
FORWARD-LOOKING STATEMENTS
This press release contains information or
statements that are or may be "forward-looking statements" within
the meaning of applicable Canadian securities laws. When used in
this press release release, the words "may", "will", "should",
"expect", "plan", "anticipate", "believe", "estimate", "predict",
"forecast", "project", "intend", "target", "potential", "continue"
or the negative of these terms or terminology of a similar nature
as they relate to the Corporation, an affiliate of the Corporation
or the combined firm following the Acquisition, are intended to
identify forward-looking statements. Forward-looking statements in
this news release include, without limitation, those information
and statements related to the Acquisition, the Private Placements,
the underwritten bank financing, the use of proceeds of the Private
Placements and the underwritten bank financing, the expected timing
of completion and benefits of the Acquisition, the conditions
precedent to the closing of the Acquisition and the Corporation's
future growth, results of operations, performance business,
prospects and opportunities, the expected synergies to be realized
and certain expected financial ratios. Although the Corporation
believes that the expectations and assumptions on which such
forward-looking statements are based are reasonable, undue reliance
should not be placed on the forward-looking statements since no
assurance can be given that they will prove to be correct. These
statements are subject to certain risks and uncertainties and may
be based on assumptions that could cause actual results to differ
materially from those anticipated or implied in the forward-looking
statements, including risks and uncertainties relating to the
following: the possible failure to realize anticipated benefits of
the Acquisition, the integration of Golder’s business, the loss of
certain key personnel of Golder, the possible failure to achieve
the anticipated synergies, the failure to close the Acquisition or
change in the terms of the Acquisition, failure to obtain the
required Golder shareholder approval or Court approval, failure to
obtain the regulatory approvals in a timely manner, or at all,
increased indebtedness, transitional risk, the fact that WSP does
not currently own Golder, potential undisclosed costs or
liabilities associated with the Acquisition, the absence of a
financing condition in the Arrangement Agreement, the reliance on
information provided by Golder, change of control and other similar
provisions and fees, the nature of acquisitions, the exchange rate
on the closing date of the Acquisition, the fact that the combined
firm will continue to face the same risks that the Corporation
currently faces, potential litigation and other factors discussed
or referred to in the “Risk Factors” section of WSP's Management’s
Discussion and Analysis for the year ended December 31, 2019, and
WSP's Management’s Discussion and Analysis for the third quarter
and nine-month period ended September 26, 2020 (together, the
“MD&As”), which are available under WSP’s profile on SEDAR at
www.sedar.com. The foregoing list is not exhaustive and other
unknown or unpredictable factors could also have a material adverse
effect on the performance or results of WSP or Golder. WSP’s
forward-looking statements are expressly qualified in their
entirety by this cautionary statement. For additional information
on this cautionary note regarding forward-looking statements as
well as a description of the relevant assumptions and risk factors
likely to affect WSP’s actual or projected results, reference is
made to the MD&As, which are available on SEDAR at
www.sedar.com. The forward-looking statements contained in this
press release are made as of the date hereof and except as required
under applicable securities laws, WSP does not undertake to update
or revise these forward-looking statements, whether written or
verbal, that may be made from time to time by itself or on its
behalf, whether as a result of new information, future events or
otherwise. The forward-looking statements contained in this press
release are expressly qualified by these cautionary statements.
NON-IFRS MEASURES
The Corporation reports its financial results in
accordance with IFRS. In this press release, the following non-IFRS
measures are used by the Corporation: net revenues; adjusted
EBITDA; adjusted EBITDA margin; adjusted net earnings; adjusted net
earnings per share; and net debt to adjusted EBITDA ratio.
Additional details for these non-IFRS measures can be found in
WSP’s MD&A for the third quarter and nine-month period ended
September 26, 2020, which is posted on WSP’s website at
www.wsp.com, and filed on SEDAR at www.sedar.com
The following non-IFRS measures are also used by
the Corporation and defined as follows: “Pro forma net revenue” is
defined as net revenue as if the net revenues of Golder were
included for the entire period. “Accretion” or “accretive” is
defined as the expected change in WSP’s adjusted net earnings per
share after giving effect to the Acquisition and any Acquisition
related adjustments. “Pre-IFRS 16 adjusted EBITDA” means the
adjusted EBITDA of Golder minus lease payments as included in the
cash flow statements. “Pro forma adjusted EBITDA” means the
aggregate adjusted EBITDA of WSP and Golder. “Pro forma net debt”
means net debt after giving effect to the Acquisition, the Private
Placements, the underwritten bank financing and any Acquisition
related adjustments. “Pro forma net debt to adjusted EBITDA ratio”
is calculated using pro forma net debt to the pro forma adjusted
EBITDA. “Pro forma adjusted EBITDA margin” is defined as the
aggregate adjusted EBITDA of WSP and Golder expressed as a
percentage of pro forma net revenues after giving effect to the
Acquisition and any Acquisition related adjustments.
The non-IFRS financial measures used in this
news release do not have a standardized meaning as prescribed by
IFRS. Management of the Corporation believes that these non-IFRS
measures provide useful information to investors and analysts for
analyzing the transaction. These non-IFRS measures are not
recognized under IFRS and may differ from similarly-named measures
as reported by other issuers, and accordingly may not be
comparable. These measures should not be viewed as a substitute for
the related financial information prepared in accordance with
IFRS.
NO OFFER OR SOLICITATION
THIS PRESS RELEASE IS NOT INTENDED TO AND SHALL
NOT CONSTITUTE AN OFFER TO SELL OR BUY, OR THE SOLICITATION OF AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OR A SOLICITATION OF ANY VOTE OR PROXY FROM ANY PERSON. THE
SUBSCRIPTION RECEIPTS WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED
OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN APPLICABLE
EXEMPTION FROM REGISTRATION REQUIREMENTS.
FOR ADDITIONAL INFORMATION, PLEASE
CONTACT:
Alain MichaudChief Financial
OfficerWSP Global Inc.alain.michaud@wsp.com Phone: 438-843-7317
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