Arcadis and IBI Group Inc. have jointly announced today that they have entered into an agreement for Arcadis to acquire all issued and outstanding shares of IBI Group for C$19.50 per share.
The acquisition of IBI Group’s forward thinking, technology-driven design firm will strengthen Arcadis’ digital leadership, complement its position in North America and drive global growth of its combined solutions, said the company.
Peter Oosterveer, Arcadis’ Chief Executive Officer, said: “The acquisition of IBI Group marks a significant milestone in the implementation of Arcadis’ business strategy. Together with IBI Group’s management team, we have big ambitions. Our shared vision to digitally transform our industries and provide clients with new and innovative technology enabled solutions differentiates us amongst our peers. Today’s announcement will help accelerate this vision, leveraging Arcadis’ global platform and IBI Group’s strong track record by creating a strong fourth Global Business Area (GBA) “Intelligence”, complementing the services and solutions we offer to clients through our three existing GBAs (Resilience, Places, Mobility).
IBI Group is a superb business with a rich history, a highly talented team and a strong cultural fit with Arcadis. We warmly welcome IBI Group’s 3,500+ employees to the Arcadis family. By combining our talents and expertise, I am confident we will strengthen our role as a digital leader in our industry and simultaneously grow and enhance our geographical footprint.
The combination of Arcadis and IBI Group will amplify our ability to deliver the most innovative and impactful projects globally as well as locally, all aimed at improving the quality of life.”
Scott Stewart, IBI Group’s Chief Executive Officer, added: “The combination of IBI Group and Arcadis will accelerate our ability to define the cities of tomorrow. Arcadis has a stellar reputation developing solutions for major societal issues from climate change to urbanization. Bringing our talent and expertise together will allow us to bring IBI Group’s strategy to life in a way that will drive an even greater impact for our clients and people.
As a combined force, we will seed IBI Group’s Intelligence sector and technology initiatives across Arcadis’ broad global footprint. We will establish the leading and most diverse architectural firm in North America and potentially the world. In addition, we will expand IBI Group’s capabilities and depth in infrastructure and environmental services, amplifying our ability to support our clients’ missions for sustainable cities and communities.”
Following the implementation of its global operating model and the creation of the three Global Business Areas, Arcadis is well positioned to complement its strong organic growth with inorganic growth opportunities. The acquisition of IBI Group is fully in-line with Arcadis’ strategy and will accelerate the delivery of the 2021-2023 ‘Maximizing Impact’ targets. Digital leadership is a key tenet of the strategy, and the acquisition of IBI Group’s leading technology platform is a significant step in realizing this ambition. IBI Group also adds significant scale to Arcadis across its GBAs in North America and in particular in the attractive Canadian market. Its services are complementary to Arcadis’ service offerings providing substantial opportunities for synergies from leveraging Arcadis’ global footprint and client base. Combining IBI Group Buildings with Arcadis Places creates a global leader in the planning, designing and building of the resilient cities of tomorrow.
The acquisition of IBI Group for an aggregate consideration of approximately C$873 million (c. €664 million1), represents 11.5x IBI Group’s estimated 2022 EBITDA2, or 9.6x post synergies, and is expected to be immediately accretive to Arcadis’ 2022E adjusted earnings per share and operating profit margins. Annual cost synergies of C$15 million per annum are expected to be fully realized within three years after the closing date, and more substantial revenue synergies are expected given the highly complementary business models with significant cross-selling opportunities across the combined client base.
The offer of C$19.50 per share provides shareholders with a premium of 30% to IBI Group’s closing share price on 15 July 2022, 32% to IBI Group’s 10-day volume-weighted average share price and 40% to IBI Group’s 30-day volume-weighted average share price. The fact that the consideration is cash will provide securityholders with certainty of value and liquidity. All directors and senior officers of IBI Group have entered into voting support agreements pursuant to which they have agreed to support and vote
1 CAD / EUR FX Rate used: 0.7609 as of 15-Jul-2022
2 As per median Bloomberg consensus as of 15-Jul-2022: C$76m
in favour of the transaction. In addition, IBI Group’s largest shareholders, IBI Group Management Partnership and its affiliated partnerships, together representing approximately 33% of the shares eligible to vote at IBI Group’s special meeting of shareholders to be held to consider the transaction, have also entered into a voting support agreement to support and vote in favour of the transaction.
Through IBI Group, Arcadis will significantly enhance its development capabilities, more than doubling its software developers. Combining IBI Group Intelligence and Arcadis Gen into a new fourth Global Business Area will create an industry leading platform of world class software and systems design, systems integration, digital client solutions and innovation capabilities. The Intelligence GBA will be a growth enabler for the existing GBAs Resilience, Places and Mobility, and provide meaningful opportunities for efficiencies and enhanced client delivery, and further improve resource planning and productivity.
The transaction will be financed with debt and is expected to result in a pro forma net debt to adjusted EBITDA ratio upon closing within Arcadis’ targeted leverage range of 1.5-2.5x.
Completion of the transaction, which will be implemented by way of a plan of arrangement under the Canada Business Corporations Act, is subject to certain customary closing conditions, including (i) IBI Group shareholder approval at a special meeting of IBI Group’s shareholders (the “Special Meeting”) by no less than 66 2/3% of the votes cast at the Special Meeting; (ii) court approval; (iii) applicable regulatory approvals; and (iv) certain other closing conditions customary for a transaction of this nature.
IBI Group’s largest shareholders, IBI Group Management Partnership and its affiliated partnerships, together representing approximately 33% of the votes, have entered into a voting support agreement to support and vote in favour of the transaction. Further, IBI Group’s directors and its senior officers have each entered into a voting support agreement to support and vote in favour of the transaction.
The arrangement agreement includes customary provisions relating to non-solicitation, subject to customary “fiduciary out” provisions.
The transaction is expected to be completed in the second half of 2022.