US firm swoops for Leeds consultancy group in £43m deal
Leeds-based project management business WYG is set to be acquired by Californian firm Tetra Tech in a deal worth £43.4m.
Tetra Tech are an engineering firm based in Pasadena, California. They say that the acquisition of listed firm WYG will allow them a platform to expand and invest in the UK and Europe, and the move will see them launch their European headquarters in Leeds.
Under the terms of the acquisition, each WYG shareholder will be entitled to receive 55p in cash per WYG share. Tetra Tech will acquire the entire share capital of the company.
WYG’s directors, who have been advised by N+1 Singer, said they consider the terms of the acquisition to be “fair and reasonable”. The takeover must be approved by a 75% of WYG shareholders.
Earlier this year WYG issued a profit warning saying that it expected it to below market expectations. The company’s share price took a 40% dive on the announcement.
It blamed “cautious business sentiment” and delays in investment decisions in the UK as a result of the Brexit stalemate. It has been forced to downgrade forecasts for its operating performance three times.
In its most recent full year results for the year to 31 March 2018, it made £154.4m in revenues but returned a pre-tax loss of £5.3m
WYG said that the acquisition by Tetra Tech offered a “different future roadmap” for its clients and employees, and said the $3.7bn firm had the financial strength to support investment in the business going forward.
Tetra Tech said it anticipated a potential reduction in third-party administrative costs and some “targeted reductions in headcount” in order to increase the profitability of WYG, although it said this could not currently be quantified.
WYG employs 1,600 people from its base in Headingley and operates in 30 locations across the UK, Europe, Asia and Africa. Tetra Tech employs 18,000 across its worldwide operations and specialises in water, energy and resources infrastructure.
Jeremy Beeton, non-executive chairman of WYG, said: “The WYG Board and I unanimously recommend the offer from Tetra Tech.
“Becoming part of the Tetra Tech Group enables benefits of scale and access to expertise across highly complementary geographies and client relationships, and brings operational infrastructure and financial strength to support WYG’s long term growth ambitions.
“We provide Tetra Tech with a strong platform for investing in growth in the UK and Europe.
“We believe the combination of our two companies will provide greater opportunities for our people and clients, as well as offering certainty of immediate value to our shareholders at a considerable premium to the prevailing share price.”
Dan Batrack, Tetra Tech, Inc. Chairman and CEO, said: “WYG advances our strategy to add firms that support our position as the premier global high-end consulting, engineering, and program management firm.
“WYG’s expertise in infrastructure and program management, as well as water and environmental services, enables us to deliver innovative solutions to support the UK’s infrastructure needs.
“Together, we will be able to provide an expanded scope of services to our customers and offer our combined staff even greater professional opportunities.”