Arcadis, a global design and consultancy organisation for natural and built assets, and IBI Group, a Canada-based architecture, engineering, planning, and technology firm, have entered into an agreement for Arcadis to acquire all issued and outstanding shares of IBI Group for C$19.50 (£12.56) per share.
According to Arcadis, the acquisition of IBI Group will “strengthen Arcadis’ digital leadership, complement its position in North America and drive global growth of its combined solutions”.
Peter Oosterveer, Arcadis CEO, said: “Today’s announcement will help accelerate this vision, leveraging Arcadis’ global platform and IBI Group’s strong track record by creating a strong fourth global business area ‘Intelligence’, complementing the services and solutions we offer to clients through our three existing global business areas – ‘Resilience’, ‘Places’, ‘Mobility’.
Scott Stewart, IBI Group CEO, added: “The combination of IBI Group and Arcadis will accelerate our ability to define the cities of tomorrow. As a combined force, we will seed IBI Group’s Intelligence sector and technology initiatives across Arcadis’ broad global footprint.
“We will establish the leading and most diverse architectural firm in North America and potentially the world. In addition, we will expand IBI Group’s capabilities and depth in infrastructure and environmental services, amplifying our ability to support our clients’ missions for sustainable cities and communities.”
The acquisition of IBI Group for an aggregate consideration of approximately C$873m (£562m), represents 11.5x IBI Group’s estimated 2022 EBITDA2, or 9.6x post synergies, and is expected to be immediately accretive to Arcadis’ 2022E adjusted earnings per share and operating profit margins.
According to Arcadis, annual cost synergies of C$15m (£9.6m) per annum are expected to be fully realised within three years after the closing date, and more substantial revenue synergies are expected given the “highly complementary business models with significant cross-selling opportunities across the combined client base”.
The offer of C$19.50 per share provides shareholders with a premium of 30% to IBI Group’s closing share price on 15 July 2022, 32% to IBI Group’s 10-day volume-weighted average share price and 40% to IBI Group’s 30-day volume-weighted average share price.
The transaction will be financed with debt and is expected to result in a pro forma net debt to adjusted EBITDA ratio upon closing within Arcadis’ targeted leverage range of 1.5-2.5x.
Goldman Sachs served as exclusive financial advisor to Arcadis, and Stikeman Elliott LLP as legal counsel. Committed financing was provided by Goldman Sachs together with Bank of America.
National Bank Financial served as exclusive financial advisor and Blake, Cassels & Graydon LLP as legal counsel to the special committee of IBI Group, and Bennett Jones LLP as legal counsel to IBI Group.
The transaction is expected to be completed in the second half of 2022.
