Montreal-based international property consultancy WSP Global Inc formally offered $1.78/share yesterday for the whole of Opus International Consultants Ltd – up from the 99c/share market close on Friday – after securing agreement to buy out the Malaysian holder of 61.2% of Opus, UEM Edgenta Bhd.
Opus also announced a lift in half-year earnings yesterday and can pay a dividend of up to 7c/share before the buyout goes through, effectively raising the takeover offer to $1.85/share. The shares had been stuck around a dollar since early February and rose from 99c on Friday to $1.70 yesterday.
Curiously, UEM Edgenta named a replacement director to Opus’s board only last Wednesday – Khazanah Nasional investment division director Elakumari Kantilal – although the takeover deal is as good as done.
UEM Edgenta’s sellout requires shareholder approval but, as part of the lockup agreement yesterday, its 69.14% shareholder, UEM Group Bhd, agreed to vote that holding in favour of the deal. UEM Group is a wholly owned subsidiary of the Malaysian Government’s strategic investment fund, Khazanah Nasional Bhd.
Opus came into existence 20 years ago, a year after the New Zealand Government sold the business, as Works Consultancy Services Ltd, to Malaysian Government-controlled Kinta Kellas Ltd.
The takeover is through WSP NZ Acquisition Ltd, a local company owned directly from Canada and incorporated last Thursday. In New Zealand, the WSP branch dropped the Parsons Brinckerhoff acronym (PB) from its name in March and it’s now just WSP NZ Ltd.
But WSP internationally includes the Parsons Brinckerhoff businesses, bought by UK construction & infrastructure group Balfour Beatty plc in 2009 and sold to WSP in 2014.
The WSP parent company reported strong second-quarter results last Thursday, lifting net earnings attributable to shareholders by 20.3% from a year ago to $C62.8 million, or 17.3%/share to C61c.
WSP said its offer valued Opus at $263.2 million. At $1.85/share, that value rises to $273.6 million.
Independent chair Keith Watson said Opus’s cash position supported a fully imputed interim dividend: “However, in view of the latest announcement of a takeover offer, the directors have deferred declaring an interim dividend. This will enable them to take advice on the offer and the appropriate level of interim dividend to be declared.”
The Opus board has appointed a sub-committee comprising Mr Watson (appointed independent chair on 1 August) and the other independent directors (Alan Isaac & Sam Knowles), to respond to the takeover notice.
Strong NZ earnings but losses in overseas markets
A few hours after the takeover was announced, Opus released its half-year results – adjusted net profit after tax up from $917,000 to $6.2 million, and operating ebit up from $2.5 million to $11.4 million. Group revenue fell 4.2% to $226.8 million ($236.8 million) but was flat on a constant currency basis. The $18.2 million cashflow from operations was the highest half-year result since Opus became a listed company in 2007.
Mr Watson said the company’s new strategy, which focuses on 3 global market sectors – transport, water & buildings – was driving an improved financial performance during a period of difficult operating condition: “In a competitive global market, focusing on the 3 market sectors has enabled us to leverage our expertise for clients no matter where they are. We have become more agile & effective, more focused on human-centred design & innovation, and we are developing stronger alliances.”
Chief executive Dr David Prentice said the New Zealand business continued to be very strong, delivering $140.6 million in revenue and an operating ebit of $18.5 million, led by a buoyant transport sector.
Opus had made important changes to the business, with experienced financial services leader Ian Blair recruited as managing director of Australia & New Zealand.
“Our pipeline for 2017 & beyond includes a collaboration with a consortium of companies to deliver the set-up phase of the Northern Corridor improvements project in Auckland for the NZ Transport Agency, and continued work to support the Kaikoura community to restore its transport links, especially along State Highway 1.
“In addition, Opus is now on 3 major water panels in Christchurch, Auckland & Wellington, a move that will benefit New Zealand communities and help the local councils move their water infrastructure into the future.”
Opus’s North America business reported $33.6 million in revenue and, while there was an operating ebit loss of $600,000, this was a $5.9 million improvement. Dr Prentice said this reflected management actions to improve operating efficiencies and align focus on driving growth in Opus’ 3 global market sectors. Bidding activities had resulted in a record future work pipeline for the water sector in North America.
The UK business, which encountered Brexit-related headwinds, generated $27.3 million in revenue and an operating ebit loss of $100,000. Dr Prentice said conditions in Australia continued to be trying and the business recorded revenue of $21 million and an operating ebit loss of $2.2 million.
Attribution: Opus release & results, WSP, UEM.