Arcadis to sell most of its architecture business and cut 1,000 staff following WSP’s failed takeover bid

Arcadis is planning to sell most of its architecture business and cut 1,000 full-time staff from its wider business as part of a restructure following a failed takeover bid by WSP.

The consultant said it is “actively changing its portfolio” by concentrating investment in sectors and markets where “structural demand is strongest”.

Arcadis is currently ranked as the world’s third biggest employer of architects, with 1,781 architects on its payroll out of a total headcount of around 34,000, according to this year’s WA100 list of the world’s biggest practices.

It said its “rightsizing” strategy will see mid-single digit revenue growth and increase its operating EBITDA margin by around 100 basis points to approximately 14.5% by 2027-2029.

Arcadis unveiled plans for the restructure shortly after WSP formally abandoned its intended takeover of the firm.

WSP said it had been “unable to engage” with Arcadis after having two bids that valued the consultant at around £3.8bn turned down over the summer.

Sectors which Arcadis said it now wants to focus on under a reset include transportation and energy and water, which account for a combined 53% of net revenues. It is targeting net revenue growth of mid to high single digits for transportation and high single digits for energy and water.

The firm is also seeking high single digit growth in high-growth sectors such as industrial manufacturing and technology, which account for 21% of revenues. The sector includes data centres, life sciences and semiconductor manufacturing.

But it plans to divest “non-core” assets including the majority of its architecture business and China operations including its activities in real estate and development, which account for 26% of its net revenues.

Arcadis chief executive Heather Polinsky said the restructure is “designed to translate our strategic strengths into stronger growth, higher margins and cash generation”.

“We are building a more focused, higher-performing Arcadis that delivers sustainable value for shareholders, our people and our clients,” Polinsky said.

Chief financial officer Simon Crowe added: “The financial rationale is compelling: a more focused portfolio, a structurally lower cost base and disciplined capital allocation will support higher margins, stronger cash generation and sustainable shareholder returns.” 

In a statement, Arcadis added: “At our Capital Markets Day last week, we announced plans to sell the majority of our architecture business and divest a majority stake of our China business.

“Separately, we are simplifying Arcadis and improving efficiency across the business by reducing non-billable roles that are not critical to delivering client value and addressing low-utilisation positions in slower-growth areas of the business. The two announcements are not linked.”

Arcadis’ entry into the architecture sector started with its acquisition of US practice RTKL in 2007, followed by its acquisition of Seattle-based Callison in 2014. It merged the two practices to form CallisonRTKL in 2015 with the business later referred to as CRTKL.

Arcadis has long considered selling its architecture arm, first tabling the move in 2017 before recommitting to the sector before acquiring Canadian multi-disciplinary firm IBI Group in 2022. Arcadis then combined CRTKL and IBI Group to create its Architecture and Urbanism division.