Exclusive-Dutch engineering group Arcadis attracts takeover interest, including from WSP, sources say
Arcadis Faces Takeover Interest Amid Valuation Concerns
By Amy-Jo Crowley
LONDON, July 23 (Reuters) - Dutch engineering consultancy group Arcadis has attracted takeover interest from bidders including Canadian peer WSP Global that view the company as undervalued, according to two people familiar with the matter.
Trading in Arcadis' Amsterdam-listed shares was temporarily halted on Thursday after they jumped 9.5% on news of interest, which was first reported by Reuters.
Potential Bidders and Market Reaction
WSP, listed on the Toronto Stock Exchange, has held talks with advisers and conducted work on and off over the last year on a possible bid for Arcadis, whose market value is about €3.2 billion ($3.64 billion), one of the sources said.
WSP, with a market value of C$23.6 billion ($16.75 billion), is an obvious suitor because, by combining operations, it could cut costs and boost revenue, the person added.
Large-cap private equity firms have also explored a potential bid for Arcadis in recent months, the people said. The sources asked not to be named in order to discuss the private deliberations.
Challenges to a Potential Deal
While the suitors are considering bids, an offer for Arcadis is unlikely to materialise quickly due to potential hurdles including the company's shareholder structure, said the people.
Responding to a request for comment, WSP's CFO Alain Michaud told Reuters the company does not comment on speculation or rumours. A spokesperson for Arcadis declined to comment.
Arcadis' Shareholder Structure and Performance
Shareholder Structure as a Barrier
ARCADIS' SHAREHOLDER STRUCTURE COULD BE AN OBSTACLE
Founded in 1888, Arcadis, which has 34,000 employees, has become increasingly vulnerable to takeover interest as its growth has stalled and shares have lagged those of U.S.-listed peers.
Recent Financial Performance
Despite the jump in late trading on Thursday, its shares are still down over 40% from a peak of €66.85 reached in November 2024.
Revenue at the firm was broadly flat at €933 million in the first quarter ended March 31, while operating EBITDA fell 5% to €127 million, according to its quarterly results.
Lovinklaan Foundation's Role
Lovinklaan, a foundation led and managed by employees, owns about 18% of the company, according to its website, and could oppose a deal unless safeguards are put in place to protect employment and skills development, the sources said.
Any bidder would likely need to offer commitments to the shareholder to secure support, they said.
Management and Future Outlook
Arcadis also has a relatively new management team led by Chief Executive Heather Polinsky, who started in March, and the board is waiting to assess whether she and other executives can improve its performance as a standalone company, the first person said.
If the board ultimately loses confidence in their turnaround efforts, the likelihood of a transaction would increase, the person added.
Additional Information
($1 = 0.8795 euros)
($1 = 1.4087 Canadian dollars)
(Reporting by Amy-Jo Crowley in London and additional reporting by Nivedita Balu in Toronto; Editing by Elisa Martinuzzi, Tommy Reggiori Wilkes and Joe Bavier)
