WSP to Acquire Golder Creating the Leading Global Environmental Consulting Firm
Strategic Environment platform uniquely positioned to capitalize on ESG trends and the related US$1.25 trillion Environmental market(1).
Earth sciences and Environmental consulting services to represent c. 25% or $2 billion of WSP’s total $8 billion pro forma net revenues(2), achieving a key milestone of its 2019-2021 Global Strategic Plan.Enhances proportion of net revenues(3)from strategic advisory services to approximately half of WSP’s total net revenues(3).Immediately increases adjusted EBITDA margin(3)(pre-synergies) toward the higher end of its 2021 strategic ambitions.Highly complementary service offering and customer base provides significant cross-selling opportunities across all of WSP’s end-markets.Establishes long-term relationships with GIC, one of the world’s largest sovereign wealth funds with an established global network, and British Columbia Investment Management Corporation, one of Canada’s largest institutional investors.Transaction overwhelmingly supported by Golder’s Partners.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES OF AMERICA OR TO ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA.MONTREAL, Dec. 03, 2020 (GLOBE NEWSWIRE) — 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 HIGHLIGHTSAcquisition 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 FINANCINGThe 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 ACQUISITIONThe 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 ADVISORSNational 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 CALLWSP 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 WSPAs 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 GOLDERFounded 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 GICGIC 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.comABOUT BCIWith 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.caFORWARD-LOOKING STATEMENTSThis 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 MEASURESThe 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.comThe 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 SOLICITATIONTHIS 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 Michaud
Chief Financial Officer
WSP Global Inc.