WSP is to acquire fellow international professional service provider Louis Berger in a $400m deal. The 5,000-strong, privately-owned company - headquartered in New Jersey, US - is active in the transportation, infrastructure, environmental and water sectors, operating globally from a network of 100 offices in over 50 countries. We take a look at the implications for the global EC market.
Louis Berger operates across the US, with offices in Europe - mainly Spain, France and the UK, where it relocated its international business head office to London at the end of 2016 (EA 18-Oct-16) - and also in the Middle East, Africa, Asia (largely India) and Latin America. Its workforce comprises engineers, economists, scientists and planners, servicing local, state and federal governments; multilateral institutions; and other public and private entities worldwide.
Services are concentrated on: architecture, construction services, emergency & disaster management, engineering, environmental services, operations & maintenance, planning and programme management.
Founded in 1953 in Pennsylvania, Louis Berger’s annual gross revenues surpassed $1bn back in 2009 and in 2014 it set itself the goal of doubling that figure within a decade through organic growth and strategic acquisition.
According to Canadian-headquartered WSP, Louis Berger currently achieves annual net revenues of around $480m, of which 70% is generated in its domestic market (excluding disaster response revenue), and normalised EBITDA of $45m.
But historically over half of Louis Berger’s revenue has been earned outside of North America, with around 2,000 of its 5,000 total staff split equally between the Middle East and Asia. The firm has recently restructured its organisation and leadership in a bid to secure greater global mobility and business transparency, whilst fully acknowledging the trend towards globalisation and industry consolidation around larger companies. However, the international business has also been impacted by a series of legal difficulties, including an ongoing court case in India relating to alleged bribes to officials to secure water consultancy projects in Assam, as reported in the local press.
Established back in the 1970s, Louis Berger’s environmental practice spans remediation, restoration and preservation of land, water, and air resources, with core services including:
- industrial hygiene | asbestos/lead survey, design and air monitoring
- biological assessments
- environmental assessments
- environmental and social impacts studies
- environmental/hazardous waste management
- environmental remediation services
- feasibility studies
- human health and ecological risk assessments
- natural resource assessments
- natural resource management
- solid waste management
- water resource management
The company ranks within EA’s Global Top 100 EC firms worldwide - as indicated in our report of the same name released in March 2018 - with gross EC revenues in excess of $50m.
WSP has previously referred to its sub-scale presence in the US market as one of the key issues informing its current growth strategy and, with just around 500 of WSP’s c4,600-strong global EC contingent based in the US, this was reiterated by environment lead André-Martin Bouchard to Environment Analyst earlier this year (EA 01-May-18). Both firms are seeing an uptick in resilience work - Louis Berger has been providing emergency management services in Puerto Rico following Hurricane Maria - so the the pairing will also be poised to capitalise on this fast-growing area in the US and elsewhere.
Last year WSP bolstered its US operations with the acquisitions of Connecticut-based water and environmental engineering services firm Leggette, Brashears and Graham (EA 08-Sept-17) and New York-based building design and sustainability consultancy YR&G (EA 08-Jun-17).
WSP president and CEO Alexandre L’Heureux said of the latest target: "We are pleased by the opportunity to have Louis Berger join WSP. The company is recognised for its expertise in sectors and services that WSP had targeted for growth, including water, environment (including emergency management) and transportation (including ports and marine), as well as master planning. This acquisition will also enable us to increase our presence in geographies we have previously targeted for growth, such as continental Europe. Lastly, it will increase our exposure to the US federal sector since Louis Berger has developed expertise and built experience in governmental contracts…"
"We will focus on integrating US operations and other regions that have proven to be drivers of growth, while pursuing the international restructuring Louis Berger had started."
Louis Berger CEO Jim Stamatis, who has led the firm since 2015, added: "I am very pleased about the prospect of joining WSP, as our values and strategies are aligned and our operations are complementary. This will create new opportunities for our employees and clients. WSP and Louis Berger are known to each other as we have pursued and won many projects together and as a result, we feel very comfortable in the strategic and cultural fit as we join together. As we have just completed our monitorship with the US government, our most successful year in the company’s history, and continued simplification and restructuring of our operations, this presented an optimal time for us to transition to a new chapter in our evolution."
The deal expected to complete in the last quarter of 2018, and will deliver around US$15m in recurring cost synergies within a year, with one-off integration and restructuring costs amounting to US$50m, according to WSP.