PASADENA, CA–(BUSINESS WIRE)–Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of high-end consulting and engineering services, is pleased to announce that it has entered into an agreement with RPS Group plc (“RPS Group”) for the Terms of a cash acquisition of RPS Group for 222p per share (the “Acquisition”). The acquisition was unanimously recommended by the RPS Group Board of Directors.
The combined 26,000 employees of RPS Group and Tetra Tech will build a leading global consultancy in the fields of water, environment, sustainable infrastructure and energy conversion. The RPS Group employs 5,000 people in Europe, UK, Asia Pacific and North America and delivers high-end solutions, particularly in the areas of power conversion, water and program management for government and commercial customers. Tetra Tech is a high-end global consultancy ranked #1 in water and environmental management, as published in Engineering News Record. Its 21,000 employees are technical experts delivering more than 70,000 projects a year around the world.
The RPS Group significantly expands Tetra Tech’s water practice in the UK and reinforces Tetra Tech’s leadership in renewable energy and environmental management. The merger strengthens our geographic footprint in the UK, European Union and Australia. RPS Group and Tetra Tech are culturally aligned and together will a Leading with science® Approach to address critical issues such as climate change, resilience and energy transition. The combination of RPS Group and Tetra Tech also advances both companies’ strategies to provide high-end consulting focused on advanced data analysis and unique software applications, such as in the areas of water management, ocean analysis and pollutant modeling.
“RPS Group advances our long-term strategy to strengthen our position as a leading global high-end consulting and engineering company focused on water, environment, sustainable infrastructure and energy conversion,” said Dan Batrack, Chairman and CEO of Tetra Tech. “We welcome the employees of the RPS group to join us and to jointly use our long-term customer relationships and project experiences. As a global consulting firm with a commitment to high-end solutions, we can offer even better career opportunities to our extended team of employees.”
Ken Lever, Non-Executive Chairman of RPS, commented, “The Board of Directors of RPS is pleased to recommend Tetra Tech’s offer, which offers our shareholders even greater value for their shares. Our combination with Tetra Tech will provide attractive opportunities and long-term benefits for our employees and global customers.”
In addition, John Douglas, Chief Executive of RPS, stated: “Joining Tetra Tech represents an extremely attractive combination of two industry leaders for our customers and an ideal opportunity for our employees to achieve RPS’ goals and contribute meaningfully the world’s largest companies to address challenging problems in energy conversion and water management around the world. I am very excited about the future of our combined company and the benefits it will bring to our employees and customers. Through the merger, Tetra Tech offers RPS and its employees a strong and culturally aligned platform, creating an outstanding consulting and engineering practice that addresses climate change and all its impacts.”
It is intended that the Acquisition will be effected by way of a court-approved scheme of arrangement (the “Scheme”) pursuant to Part 26 of the UK Companies Act 2006. The purpose of the plan is to give Tetra Tech indirect ownership of all of the issued and issuable share capital of the RPS Group.
Details of the proposed takeover will be sent to RPS Group shareholders within 28 days of the date of this announcement (unless otherwise agreed by the Takeovers and Mergers Board under the UK City Code on Takeovers and Mergers). Subject to, among other things, the satisfaction or waiver of conditions, approval of the plan by RPS Group shareholders, receipt of applicable regulatory approvals and court approval of the plan of settlement, the acquisition is expected to close by the end of 2022.
For further details regarding the Proposed Takeover, readers are referred to the binding offer notice in relation to the Takeover (the “Announcement”) previously published in the United Kingdom on the date of this publication pursuant to Rule 2.7 of the UK City Code on Takeovers and Mergers and which can be found on Tetra Tech’s website at tetratech.com/investor-offer. The announcement and other important documents (including but not limited to the New Credit Facility (as defined below)) are also attached to Tetra Tech’s most recent report on Form 8-K filed with the SEC at the same time as this press release. Please note that this press release is not a summary of the announcement and should not be considered a substitute for reading the announcement. We therefore strongly encourage you to read the announcement in its entirety in conjunction with this press release, which is governed in all respects by the full text of the announcement.
The acquisition is expected to add a mid to high 10% increase in adjusted earnings per share (EPS) after realizing the full benefit of expected £21m of cost synergies and the integration into Tetra Tech. The cost of realizing these synergies is estimated at £16m and would be significant in the first 12 months following completion. Adjusted earnings per share exclude one-time transaction-related costs and intangible amortization.
All relevant documentation will be made available on Tetra Tech’s website at tetratech.com/investor-offer.
Concurrent with the announcement of the acquisition, Tetra Tech has received “certain funds” of £714m (approximately $800m) plus $350m new credit facility, which includes obligations for the full purchase price for the acquisition value of the entire issued and issuable share capital of RPS. Bank of America, NA will act as administrator and sole lender with respect to the new credit facility.
The new credit facility is designed to ensure compliance with the “determined funds” requirements from the date of announcement of the acquisition under the UK City Code on Takeovers and Mergers. In addition, the financing plan for the acquisition was designed and structured to preserve Tetra Tech’s credit profile.
The new credit facility contains representations, guarantees, conditions precedent, covenants, a leverage ratio and events of default customary in a transaction of this type.
Approvals and Recommendations
The Board of Directors of RPS Group unanimously recommended the acquisition.
Tetra Tech has also received representations and letters of intent from certain major shareholders of the RPS Group to vote in favor of the Transaction at the RPS Group shareholders meetings to be convened in connection with the Scheme in respect of an aggregate number of shares in the RPS Group, collectively representing approximately 28% of the existing issued share capital of the RPS Group as of September 23, 2022.
Financial and Legal Advisor
BofA Securities is acting as financial advisor to Tetra Tech on the acquisition. Tetra Tech is being advised by Hogan Lovells International LLP.
About the RPS group
RPS Group is a public limited company registered in England and Wales. RPS Group shares are listed on the Official List of the London Stock Exchange. Founded in 1970, RPS Group is built on a legacy of environmental and social commitment. RPS Group is a diversified and recognized global services company with approximately 5,000 talented employees.
An established technology-enabled consulting firm operating across a range of sectors, RPS Group provides specialized services to public and private sector clients with a focus on front-end consulting. RPS Group creates shared value for all stakeholders by solving problems that matter in a complex, urbanized and resource-constrained world, and focuses its expertise on the parts of the project lifecycle that have the greatest impact on project outcomes, with a strong sustainability agenda. RPS Group is widely recognized in this regard, having been ranked number one for climate change and energy consultancy in the UK by Environment Analysis for 2019/2020, ranked as a top 200 environmental company by Engineering News-Record in 2021 and recognized as 2021 became one of the first “Carbon Champions” of the Institution of Civil Engineers.
The RPS Group operates from around 100 offices in 12 countries, with more than 99% of its net sales in FY 2021 coming from its activities in OECD countries. The majority of its net income for fiscal 2021 was generated from its operations in the UK, Australia and the United States.
About Tetra Tech
Tetra Tech is a leading provider of high-end consulting and engineering services for projects worldwide. With 21,000 employees working together, Tetra Tech offers clear solutions to complex problems in the areas of water, environment, sustainable infrastructure, renewable energy and international development. We are Leading with science® to provide sustainable and resilient solutions for our customers. For more information about Tetra Tech, please visit tetratech.com or follow us on LinkedIn, Twitterand Facebook.
All statements in this press release that are not historical facts are forward-looking statements. All forward-looking statements in this press release represent management’s best estimate of what may occur in the future. However, actual outcomes and results of Tetra Tech are not guaranteed and are subject to certain risks, uncertainties and assumptions (“Forward Factors”) and may differ materially from those stated. For a description of future factors that could cause actual results to differ materially from such forward-looking statements, see the discussion in the “Risk Factors” section of Tetra Tech’s Forms 10-K and 10-Q filed with the US Securities and Stock Exchange Commission.
Except as required by applicable law or regulation, Tetra Tech expressly disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained in this release to reflect any change in Tetra Tech’s expectations with respect thereto or any change in events. Conditions or circumstances on which any such statement is based.