Californian consulting engineer Tetra Tech has made an all-cash offer for UK consultant WYG that values the company at £43m, more than three times its market capitalisation.
The board of WYG has unanimously recommended that shareholders accept the offer, and holders of 73% of the company’s share capital have said they will support the takeover.
Jeremy Beeton, the chair of WYG, said: "The WYG board and I unanimously recommend the offer from Tetra Tech. Becoming part of the Tetra Tech Group enables benefits of scale and access to expertise across highly complementary geographies and client relationships, and brings operational infrastructure and financial strength to support WYG’s long term growth ambitions.Â
"We provide Tetra Tech with a strong platform for investing in growth in the UK and Europe.Â We believe the combination of our two companies will provide greater opportunities for our people and clients, as well as offering certainty of immediate value to our shareholders at a considerable premium to the prevailing share price."
Dan Batrack, the chief executive of Tetra Tech, said WYG’s expertise in infrastructure and programmme management, as well as water and environmental services, would enable his company to "deliver innovative solutions to support the UK’s infrastructure needs".
WYG, which is based in Leeds and works mainly on UK schemes, issued a profit warning in February this year, blaming "political uncertainty" caused by Brexit. This was followed by a 60% fall in the value of its shares.
It made a pre-tax loss of £5.3m in the year to 31st March 2018 on revenue of £154m. It has 1,600 employees operating out of more than 50 locations around the world.
Tetra Tech has 18,000 and already has six offices in the UK. Last year it generated revenue of close to US$3bn.
Image: Among WYG’s projects is the decommissioning of the Dounreay nuclear facility in Scotland (Guinnog/CC BY-SA 3.0)