Speculation late last week from a Wall Street online media platform that industry giant WSP Global Inc. is seeking to acquire major industry player Jacobs Inc. has industry analysts and executives seeing the potential deal as plausible, but could also come with market overlap and cost-synergy risk.
According to an Oct. 26 note to investors from Baird Equity Research, Street Insider reported on Oct. 24, citing unnamed sources, that Montreal-based WSP approached Dallas-based Jacobs “for a largely stock-financed combination,” claiming that the latter has hired Centerview Partners “as a banking advisor.” No further transaction details were disclosed. Andrew Wittmann, Baird’s lead construction sector analyst, estimates a 75%-25% stock and cash split, “unless WSP raises cash equity” from its investors.
The combination could create a company of some 120,000 employees, which he deemed «unprecedented.»
The firms did not comment on the speculated deal, but WSP CEO Alexander L’Heureux told Canada’s Globe and Mail last year that “For what will be required in terms of investment in digital transformation in the next few years, I think you need size.” He added, “If there was a large opportunity, we’re clearly open for business.”
Both firms have long histories of growth by acquisition. Last year WSP acquired U.S.-based engineering firm Power Engineers, which added 4,000 employees and solid energy sector market capacity to its offerings. The U.S. market now makes up about 40% of WSP net sales.
“WSP’s M&A history has been comparatively more successful relative to performance than at other consulting/engineers,” said Wittmann.
WSP’s other major acquisitions include the $2.3-billion purchase of the environmental and infrastructure division of U.K-based Wood Group in 2022 and the $1.4-billion buy of Canada-based Golder Associates in 2021. WSP had also reportedly been in talks in 2020 to buy AECOM, set to be its largest ever deal, but halted them due to COVID-19-related business risk. Jacobs completed a merger of its Critical Mission Solutions and Cyber and Intelligence businesses with consultant Amentum in 2024, forming a separate company now traded on the New York Stock Exchange.
“Both firms have tailwinds with reshoring capex and public works trends in attractive global sectors like mission critical, water, power, etc. You could end up seeing the first combined firm with $50 billion-plus market cap with a formidable international presence,” said one analyst.
According to Wittmann, a Jacobs acquisition would improve both firms’ cost synergies and margins, and contribute to WSP’s “greater market presence in water infrastructure where [it] has less scale in an above-average growth market.” WSP also would benefit from Jacobs’ larger market position in advanced manufacturing and life sciences, which is “mostly absent from [its] offerings.” One industry executive sees water as a steady “but not explosive” market, and notes that neither firm has design-build capabilities, which could be needed.
In an Oct. 26 note, National Bank of Canada analyst Maxim Sytchev said the WSP connection would offer the legacy Jacobs business “deeper international reach,” but warned that «the potential combination strongly echoes the speculation that surrounded the WSP-AECOM transaction, with similar debates around scale, fit and deal structure.” Wittmann added that the two firms’ large overlapping transportation/infrastructure practices offer “dis-synergy potential.”
Both firms «have had much experience in acquisition integration/restructuring/reorganization,» said Wittmann, who ranks WSP’s track record as “above average.” But he described the potential acquisition “as a net risk” to Jacobs’ current profitability trend, “so the timing seems off.”
The analyst added that with two veteran dealmakers, the transaction «certainly could happen. Less clear if it should happen.»
