ARCADIS to merge with EC Harris (NL/UK)
Tuesday 18 October 2011
|Arcadis, the international design, consulting, engineering and management services company, has announced that it has signed a merger agreement to acquire the full ownership of EC Harris LLP, an international built asset consultancy headquartered in London, providing high-value consulting and management services for the realization and operation of buildings, manufacturing and processing plants and infrastructure facilities. |
|EC Harris gross revenues for its last financial year ending April 2011 were £254 million (€290 million) with net revenues of £222 million (€254 million) and a normalized profitability of about 7% (EBITA as percentage of net revenue). The company is owned by about 180 partners and currently employs some 2,600 people worldwide. |
Arcadis will finance this merger by issuing 3.0 million shares to current EC Harris partners, in addition to an undisclosed cash amount, drawing upon its existing credit facilities. The shares have a lock up period of 12 months after closing. The purchase price is based on a similar valuation as for our other recent larger acquisitions. The transaction is expected to be accretive to earnings per share as of 2012 (based on net income from operations, which excludes amortization). Further financial details were not disclosed.
The merger is contingent on EC Harris partner approval and related closing requirements. 28 of the senior partners, including all executive members of the EC Harris Board, have signed irrevocable undertakings in support of the transaction. It is anticipated that completion will occur in November 2011.
EC Harris has a long standing heritage and has 48 offices in 28 countries, including many throughout Central and Eastern Europe, the Middle East (Qatar, Saudi Arabia, the UAE and Egypt) and Asia (Hong Kong, China, Singapore and Taiwan). The company has focused on international diversification resulting in significant recent growth in Asia and the Middle East.
In this current year the activities in these regions are projected to provide some 32% of the company’s revenues with 57% coming from the UK and 11% from other European countries.
EC Harris’s activities include strategic and advisory services, cost consultancy, project and program management and transactional support. The company is positioned as a “Built Asset Consultancy”, providing full life-cycle services to built assets in the property, public, transportation, water and industrial sectors.
Through this merger, Arcadis will grow to almost 19,000 professionals and €2.3 billion revenues. Arcadis and EC Harris will together obtain a top five global position in strategic advisory and project delivery services for ‘Built Assets’. The combined company will have close to 6,000 staff in this segment, with leadership positions in Europe, the US and Brazil.
With a 30-year history and 550 people in Asia and 340 people in the Middle East, EC Harris provides a strong foothold in Asia and substantially expands our presence in the Middle East. Furthermore, we will now have well over 2,000 people in the UK, bringing us in the top 10 in this major market and allowing us to expand our relationships with multinational clients both inside and outside the UK.
EC Harris will continue to operate as a partnership, with a company-wide remit within Arcadis, taking up a leadership role in the global Buildings business line and driving the development of the Program and Project Management services. They will bring their built asset consultancy approach to the wider business, taking a leading role in the UK., Middle East and Asia.
The EC Harris leadership team will remain in place, with Philip Youell continuing as Chief Executive and joining the ARCADIS Senior Management Committee. Richard Clare, the present Chairman of EC Harris, will step into a wider strategic client development role in Arcadis taking Built Asset Consultancy into Arcadis clients. He will continue on the EC Harris Board in an advisory capacity.
Arcadis CEO Harrie Noy about the merger: “This merger is a major step forward in realizing our strategic ambitions. With EC Harris we get a leading position in project management and related services while their built asset consultancy approach perfectly fits our goal of expanding our services at the high end of the value chain.
“With the expansion of our footprint in the Middle East and Asia we can capitalize on the growth opportunities in these markets. Our strengthened position in the UK market will allow us to provide a wider portfolio of services to the clients of our combined firms. We welcome the strength of the EC Harris brand and the leadership they bring to Arcadis and are excited about the synergy opportunities.”
Philip Youell, Chief Executive of EC Harris said: “This is a unique deal that will accelerate our vision and plans for growth. Whilst we have been successful in winning some very large programs of work and have many more in the pipeline, the demand from our clients is such that we recognized that we needed to grow and develop internationally, at a much faster rate than we are currently.
“We have received a number of approaches from large international companies in the past, but Arcadis is the only one that has been right culturally and strategically for EC Harris, it is an exceptional fit. Arcadis genuinely shares a client-first philosophy and a clear vision of the style of business we need to be in order to meet changing client needs. We now have the strength and intention to invest and further develop a leading global built asset consultancy position.”
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