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WSP eyes more deals after £820m Parsons Brinckerhoff buy

Engineer WSP is likely to buy more companies following the £820m acquisition of consultant Parsons Brinckerhoff.

In a conference call to analysts, WSP’s president and chief executive Pierre Shoiry said the company had ensured it had the finances to do more deals. He said: “Our focus in short and medium term will be integration of this acquisition but we have healthy pipeline of smaller acquisitions in various countries. We are looking at growth opportunities in the Nordic countries and in Canada as well.  We want to come out of this deal with a balance sheet which still has some room because there are opportunities out there. We are not discounting additional M&A activity, but the focus of both teams now is to make this deal a very successful deal.”

The firm said the purchase of Parsons Brinckerhoff from troubled construction giant Balfour Beatty, announced yesterday, would enable it to grow in the US and reduce costs by about £15m a year and increase margins, particularly in the UK and Europe, Australia and Canada.  In total the two firms have 31,000 staff worldwide.

Mr Shoiry said the deal would enable “cross-selling of additional services and expertise, and development of global client programmes” and that the two companies had complementary positions with relatively little overlap. Of the UK he said the two businesses are “very, very complementary: Parsons Brinckerhoff is very public sector-focussed in power and transport and we are very focussed on land development and building”.

He added that he expected the UK public sector market will improve. He said: “In the UK we believe there is room for some upside with the economy recovering – we have seen it. We operate quite a bit in the private sector and we are seeing the private sector moving very positively now and we believe the public spending will follow in the UK.”

He added: “We believe there is opportunity to improve margins, both through scalability, and in the public sector Parsons Brinckerhoff is in a leading position in rail and transportation in the UK and we are seeing a lot more activity around there. We believe there is potential for margin improvement in our operation and PB’s operation in the UK and Europe in general.”

Together the two firms have over 5,000 staff in the UK and the presentation to analysts said the deal would “consolidate its top tier position” in the country.

In Australia, where Parsons Brinckerhoff shed 750 staff following the economic slowdown in 2013, Mr Shoiry said he was “cautiously optimistic” and expected a “slow recovery” adding that WSP had seen a pick-up in its Australian business in recent months.

The US will become the region producing the largest share of revenue within the combined firm at 27 per cent compared with 9 per cent in WSP alone. The UK will continue to produce 16 per cent of turnover.

The deal is subject to approval by Balfour Beatty shareholders and regulators in various countries. It is expected to take place in the fourth quarter of 2014.

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