Canada; a lifebuoy to UK Construction?

Published: 3 July 2012

As consolidation continues across our domestic construction markets, so we begin to look at less obvious partners and nations in which to explore potential compatibility.

Last month it was announced to the markets that British Consultant WSP was ‘merging’ with Toronto listed Genivar, one in a long line of UK based Consultants to merge with international players in recent years. The merger has been met with a mixed reaction, including a significant dose of the consolidation scepticism that we have become used to reading when any UK construction sector business is acquired by a larger international firm.

The benefit of being bought by a huge international brand to some at least outweigh the negatives of losing your domestic identity, bur Genivar is by no means huge, and is virtually unknown outside of Canada. It’s not surprising to see why some have questioned the deal. We are more accustomed to the larger US firms blazing the acquisition trail, think AECOM, URS or CH2M Hill’s recent purchases. Increasingly however the UK is looking to the rigidity of the Canadian economy to provide investment or growth opportunities to our ailing domestic construction markets.

The UK has a reputation for developing world leading Engineers and Consultancies; all we seemingly lack is the funding and geographical spread. WSP Chief Executive Chris Cole has stated that a merger was necessary if WSP were to continue its successful international expansion plans, and that therefore aligning to the ‘powerhouse’ that is the Canadian economy was vital, (and probably quite shrewd).

Take a look at the backdrop to the WSP deal. Genivar turned over £400M in 2011 with a 2012 market value of £516M. Compare that to WSP with a turnover of £717M and modest market value of £166M. It paid only £278M for the entire issued share capital of WSP. Canada, arguably now the strongest economy in the northern hemisphere has got more ‘bang for its buck’.

Fiercely independent, WSP was not top of the list for obvious takeovers or mergers. Cole had remained stoic that their brand identity was synonomous with their British heritage. Perhaps this too is why partnering with the naturally subtle Canadians offered so much potential; Genivar needed WSP as much as WSP needed them. 95% of Genivar turnover is domestic, compared to WSP’s presence in over 200 countries.

WSP wasn’t the first to look at Canada. Indeed Carillion and Turner and Townsend have both set up outposts on Canadian soil in recent years. In the last two years Canadian business have acquired architects Nightingale and Archial as well as sniffing around the UK property and support service sector in CGI’s approach to UK rival Logica.

Set this against the backdrop of the Euro zone crisis and it becomes obvious that Canada really is a land of opportunity. One thing is for sure, the recent WSP merger has firmly set Canada on the construction roadmap and I’m sure they won’t be the last British Consultancy to head west.

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