WSP has bought Balfour Beatty’s professional services division, Parsons Brinckerhoff, for £820M.
The sale price is a good £100M more than analysts forecast last month.
It also represents a healthy profit for Balfour Beatty, which acquired the consultant for £380M in 2009.
Some £67M of cash will be retained within Parsons Brinckerhoff.
Balfour Beatty will return up to £200M to shareholders, and will use around £85M to reduce its pension fund deficit
The deal makes WSP one of the world’s largest professional services firms, with 31,000 employees and total revenue of £2.3bn.
The Canadian-headquartered firm said it expects to achieve annual cost synergies of approximately £15m, excluding any restructuring, integration expenses and transaction related costs. These savings will be delivered over a two-year period.
WSP president and chief executive officer Pierre Shoiry said: “We expect to successfully reach the strategic objectives we had set for 2015 by creating one of the largest global pure-play professional services firms in our industry around our four pillars, namely our employees, our clients, our operational excellence and our expertise.
“We also anticipate that the employees of both firms will benefit from the transaction, as we integrate our talents and make the most of our greater scale to continue to develop our people, improve their career opportunities and advance their ability to work globally.”
Parsons Brinckerhoff president and CEO George Pierson will become an executive member of the combined board of directors following completion of the takeover.
Steve Marshall, executive chairman of Balfour Beatty said: “The board believes the sale price of £820M delivers both a significant return on our original investment and a compelling level of value creation for shareholders.
“The sale of Parsons Brinckerhoff follows the recent revaluation of our investments portfolio, which underlines the potential of this division to create value internally and across the Group. In the US, our core construction business is well positioned in a recovering market. In the UK we see the potential for margins to progressively recover to peer group levels. Our services business, meanwhile, is well placed to benefit from the growing investment in infrastructure. Together, these elements will provide a strong foundation for an incoming Group CEO to take the company forward.”
Balfour Beatty said it will reposition itself “as an Anglo-American infrastructure group focused on construction, services and investments”.