Industry peer shows interest in Arcadis: bid insufficiently reflects value

Canadian engineering firm WSP Global last week submitted a second, increased bid of €51.50 per share for Arcadis. The bid represents a 48% premium over the volume-weighted average share price of the past three months. In early July, WSP had already made a first (undisclosed) bid of €48.50 per share, which was rejected by Arcadis's Executive Board and Supervisory Board. The new bid is currently being assessed by the company.

Midlin has been a shareholder in Arcadis since 2018. The company has developed well in recent years, but its share price has recently come under pressure due to disappointing results. Growth in its water, energy transition and climate adaptation activities was overshadowed by headwinds in its real estate division, particularly in Canada, and the completion of several large infrastructure projects. In our view, this largely reflects temporary headwinds, while the structural growth trends in Arcadis's end markets remain strong.

We see it as a positive signal that a party such as WSP recognises the quality and value of Arcadis. At the same time, we believe the current bid is inadequate. In our view, it does not do justice to Arcadis's strategic value, with strong market positions in Europe, Australia and the United States. We are convinced that "the intrinsic value of the company is higher than the current bid." In addition, the bid insufficiently reflects the synergy benefits that a combination with WSP could generate.

We have confidence in the current management and expect it to further unlock Arcadis's intrinsic value in the coming years. At the end of September, the company will present its renewed strategy for the next three years at its Capital Markets Day. This will be an important moment at which Arcadis will give the market more insight into its strategic priorities, growth potential and future value creation.