Key Takeaways:
WSP Global raised its offer for Arcadis to €51.5 a share after the Dutch engineering firm rejected an earlier €48.5 bid as too low, confirming a consolidation push in the global engineering sector.
WSP Global submitted a second unsolicited takeover bid for Arcadis at €51.5 per share, the Amsterdam-listed company said Friday, after its board unanimously rejected an initial €48.5 offer that it said "fundamentally undervalued the company." The revised proposal values Arcadis at roughly €3.6 billion, based on its outstanding shares, and is now under review.
"The board is reviewing the revised proposal and will make a further announcement in due course," Arcadis said in a statement, confirming a Reuters report from Thursday that first revealed WSP's interest. Toronto-listed WSP, with a market value of C$23.6 billion ($16.8 billion), has worked on and off over the past year on a potential bid, viewing Arcadis as undervalued, according to people familiar with the matter.
Arcadis shares jumped 9.5% in early Amsterdam trading Friday after closing 11.5% higher the prior session on the initial Reuters report. The stock remains more than 40% below its November 2024 peak of €66.85, reflecting stalled growth that has made the 138-year-old firm a takeover target. First-quarter revenue was broadly flat at €933 million, while operating EBITDA fell 5% to €127 million.
A shareholder hurdle
Any deal faces a potential obstacle in Lovinklaan, a foundation led and managed by Arcadis employees that owns about 18% of the company. The shareholder could oppose a transaction unless safeguards protect employment and skills development, the people said, meaning a bidder would likely need to offer commitments to secure its support.
Large-cap private equity firms also explored a potential bid for Arcadis in recent months, the people added, though no competing offer has emerged. Arcadis has 34,000 employees and operates across more than 30 countries, providing engineering and consultancy services for infrastructure, water, and environmental projects.
New leadership in the hot seat
The company installed Heather Polinsky as chief executive in March, and the board is waiting to assess whether her turnaround plan can improve performance as a standalone entity, one of the people said. If the board ultimately loses confidence in the management team's ability to revive growth, the likelihood of a transaction would increase.
WSP, which has pursued acquisitions as a core growth strategy, could cut costs and boost revenue by combining operations with Arcadis, the person added. The Canadian firm's CFO Alain Michaud declined to comment on the speculation when contacted by Reuters.
This article is for informational purposes only and does not constitute investment advice.
