By Jaime Llinares Taboada
John Wood Group PLC said Wednesday that it has agreed to sell its Built Environment consulting business to Canadian company WSP Global Inc. for $1.9 billion.
The U.K. engineering and consulting business said the sale delivers significant value for its shareholders and enhances its financial flexibility. The primary and immediate use of the money will be to reduce net debt and strengthen its balance sheet, the company said. Wood had net debt of $1.4 billion as of Dec. 31.
In addition, Wood said on completion it will consider capital allocation options including the settlement of liabilities, organic and inorganic investments, and shareholder returns which might include the restoration of the ordinary dividend.
Wood’s Built Environment division generated a pretax profit of $112 million last year. The business employs around 5,500 consultants across offices mainly in North America and provides solutions for environmental risks, climate resilience, sustainable infrastructure and mobility.
WSP said it will fund the purchase with a new credit facility of $1.81 billion. “Our platform will be increasingly diversified and resilient, with increased scale in geographies which we have identified for growth such as the United States, where our [Earth and Environment] team will double in size,” WSP’s Chief Executive Alexandre L’Heureux said.
“This transaction will deliver significant value for our shareholders and marks a new chapter for Wood,” Wood’s CEO Robin Watson said.
Completion is expected in the second half of 2022.
Shares in Wood at 0751 GMT were down 1.6% at 234.9 pence.
Write to Jaime Llinares Taboada at email@example.com; @JaimeLlinaresT