WSP to buy Alberta engineering firm for $366 million; earns $17.9 million in Q4

MONTREAL - WSP Group is expanding its reach in Western Canada's oil and gas sector by announcing plans to acquire Focus Group Holding Inc. for $366 million.

The transaction to buy the 1,700-employee Alberta engineering and geomatics firm with $280 million of annual revenues is expected to close in about a month. It has the support of 80 per cent of Focus' shareholders.

The deal is supported by an $80 million investment in WSP divided equally between the Caisse de depot and the Canada Pension Plan Investment Board.

WSP will also fund the transaction through a $180-million public bought deal and the company is also increasing its credit facility by $200 million to $600 million.

The Montreal-based engineering firm (TSX:WSP) said the acquisition will increase its Canadian workforce to about 6,100 employees, located in all provinces while balancing its Canadian platform and provide cross-selling opportunities.

WSP chief executive Pierre Shoiry said the acquisition will allow the company to benefit from Focus' deep experience in the oil and gas industry, especially in upstream, oil sands, midstream and liquefied natural gas (LNG) export infrastructure development projects.

"Through this acquisition, not only are we expecting to become a more important player in the Canadian oil and gas industry, but also to strengthen our presence in Western Canada," he said in a news release.

The deal contributes to the company's target of adding $500 million in revenues from acquisitions and having 20,000 employees before the end of 2015. With the acquisition they would have 16,700 employees worldwide.

Upon closing of the deal, Focus CEO David Ackert will head WSP Canada and become director of its global oil and gas network.

The engineering firm also announced Wednesday that it earned $17.9 million attributable to shareholders or 34 cents per share in the fourth quarter. That compared with $23.1 million or 45 cents per share a year earlier. Net revenues increased 5.9 per cent to $436.1 million.

Excluding restructuring charges, net profit was $21.1 million or 40 cents per share, compared to 52 cents a year ago excluding one-time items such as integration costs and a tax recovery.

The backlog stood at nearly $1.5 billion, up 5.4 per cent from the prior year.

WSP Global, formerly Genivar, was expected to earn 41 cents per share in adjusted profits in the fourth quarter, according to analysts polled by Thomson Reuters. Revenues were forecast to reach $420.6 million.

For the full year, it earned $71.1 million or $1.38 per share, up from $46.3 million or $1.15 per share in 2012. Adjusted profits were $78.8 million or $1.52 per share, above the $1.43 per share forecast by analysts. Net revenues were $1.68 billion, up from $1 billion in 2012.

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