WSP’s decision to submit to the charms of an overseas suitor is not surprising given the chief executive’s belief that the firm needed to grow fast

mugs sarah richardson

WSP’s revelation last Friday that it is to be bought by Canadian consultant Genivar will have raised a fair few eyebrows in the industry - not least because, hand on heart, many within the sector would probably have to admit to having little or no knowledge of the Montreal-based business.

But given that the UK’s biggest consultants are being snapped up with the regularity of England footballers succumbing to injury, the fact that WSP is the latest to submit to the charms of an overseas suitor is not in itself surprising - particularly given chief executive Chris Cole’s repeatedly stated belief that the firm needed to grow fast.

Last July, he told Building that “medium is not a place to be in this industry at the moment,” and said he was open to a single, large deal as well as bolt-on acquisitions. This week, he reiterates that WSP had to merge to keep its edge - and says that the combined company will target further deals in the US and Australia.

Although Genivar is an unknown quantity to most UK firms, the fact that WSP has chosen to align itself with a Canadian business should also be less of a surprise than it first appears. The relative strength of the construction market in Canada has drawn the attention of firms across the UK - among them Carillion and Turner & Townsend.

It seems unlikely that wsp will be the last major player to tie up with a canadian business

And although it is the US giants Aecom and CH2M Hill which have made recent headlines by swooping in on UK companies, Canadian businesses also have a growing, but slightly less high-profile, track record of forging takeover deals for British firms - architects Nightingale and Archial have both been acquired by Canadian businesses over the last two years. There is also a broader trend for Canadian investment in the UK, including in the property sector and other related industries - such as IT consultant CGI’s approach to UK rival Logica.

Despite having less than two-thirds of the turnover of WSP, Genivar had a market value of £516m at the time the deal was announced - three times that of its new British acquisition. It is this financial strength that will enable further growth, and access to the strong Canadian market means that there is work there to service.

All of this takes on added significance given the worsening outlook in Europe, with the construction market now not forecast to return to growth until 2014. Even then, output could be down almost 12% on 2008 figures, according to research group Euroconstruct. This could well act as a constraint on further mergers or takeovers between European and UK businesses - unless, of course, the deal comes with access to lucrative overseas markets, such as the increased presence in China that Arcadis gained by buying EC Harris.

So, as consolidation in the consulting sector continues, it seems unlikely that WSP will be the last major player to tie up with a Canadian business - and other executives looking anxiously at their forward order pipelines could do worse than to take a few trips out west.

Sarah Richardson, editor