Rumours circulate of merger between WSP and Aecom

Canadian engineer WSP has approached Los Angeles rival Aecom to discuss a possible merger, the Bloomberg news agency reported yesterday. Sources close to the talks said they were at a preliminary stage.

The two companies are about the same size, with Aecom’s market capitalisation standing at $7.7bn today following a 4% share price rise and Montreal-based WSP at $7.6bn. However, in October last year Aecom announced the $2.4bn sale of its Management Services business to American Securities and Lindsay Goldberg. The transaction is expected to close in the first half of this year.

That decision followed lobbying by activist investor Starboard Value. In June last year, Starboard wrote to Aecom chief executive Michael Burke, urging the company to explore sale of Aecom’s Construction Services (CS) segment. The letter said Aecom had been built through a series of acquisitions that had not been effectively integrated, and that the company’s various segments lag its peers on different operating metrics.

According to Bloomberg, an acquisition could lead to cost savings of about $200m by consolidating offices and streamlining procurement.

Both firms have grown through acquisitions, with Aecom completing 22 purchases in the past 10 years, with the last deal being Shinnick Construction in July 2017. WSP has been more active in the recent past: it bought eight other businesses in 2019, most recently New York-based consultant Ecology and Environment.

Image: A WSP USA assessor at work following Hurricane Harvey in 2017 (WSP)

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