MONTREAL – Engineering and consulting firm Genivar Inc. (TSX:GNV) has signed a friendly deal to buy British company WSP Group PLC for $442 million in cash.
“Through the combination of our firms, we are creating one of the world’s leading professional services firms,” Genivar president and chief executive Pierre Shoiry said in a statement.
“Moreover, our firms are complementary with limited geographical overlap, combining talented teams to enhance the leadership and expertise of the global organization.”
Genivar said it expects the deal will be immediately accretive to its earnings per share without any revenue and cost synergies.
Under the agreement, WSP chief executive Christopher Cole will become executive chairman of Genivar, while Genivar chairman Richard Belanger will become the lead independent director.
“I believe this transaction will provide WSP, our staff and our clients with enhanced opportunities and the combined entity will achieve increased prominence in the global markets in which we work,” Cole said in a statement.
Genivar has offered 4.35 pounds per WSP share, a premium of about 67 per cent over WSP’s closing share price on Wednesday to bring the purchase price to 278 million pounds or roughly $442 million.
Including pension liabilities, the enterprise value of the deal is about $637 million.
The takeover requires approval by a majority of WSP Shareholders voting at a meeting, representing not less than 75 per cent in value of the WSP shares voted.
Genivar has already signed agreements with WSP shareholders, who collectively own 35.1 per cent of the company, to support the deal.
To finance the purchase, Genivar said it will raise $225 million in a bought deal public offering of subscription receipts priced at $24 and $197 million in a private placement at the same price with two existing shareholders — the Canada Pension Plan Investment Board and the Caisse de depot et placement du Quebec.
Genivar has also signed a deal for a new $400-million revolving credit facility.
The $98.5-million investment by the Caisse will more than double its stake in Genivar to nearly 7.4 million shares or about a 15 per cent interest in the company.
“By completing the acquisition of a European leader, Genivar broadens its client base, diversifies its expertise and expands its geographical coverage across the globe,” said Normand Provost, executive vice-president of private equity at the Caisse.
“Through this investment by the Caisse, Quebecers will continue to benefit from the success of this Quebec company.”
Shares in Genivar, which were halted before the announcement was made, were down four cents at $25.05 on the Toronto Stock Exchange on Thursday.