Posted on October 11, 2022
The €295 million acquisition of DPS, the Dublin-based engineering and construction management firm, by the Dutch company Arcadis will be a “game changer” for the engineering services sector in Ireland.
The deal, which was announced last week, will see DPS integrated into a much larger company that has €3.2 billion in revenues, annual profits (Ebitda) of more than €300 million, and more than 33,000 staff in over 70 countries.
Industry sources said the deal will give DPS a new global reach which will allow it to challenge the likes of Jacobs, the US engineering services giant which has 55,000 employees.
It will also mean DPS joining a company with much greater financial firepower on its balance sheet, which sources said will allow it to challenge PM Group, its main Irish competitor, and Jacobs for contracts to oversee the design and construction of the very largest projects in Ireland, particularly in the life sciences and pharmaceutical sectors.
DPS already counts some of the world’s largest pharma and technology companies among its client base, including Intel, Pfizer, MSD, Moderna, Johnson & Johnson, Bristol Meyers Squibb and Glaxo Smith Kline. However, the firm has often struggled to win contracts for some of the largest projects announced by these firms as it did not have the cash reserves necessary to carry the projects to completion.
Being part of Arcadis will immediately allow the Dublin-based firm to take on bigger projects. For Arcadis, a publicly listed firm on the Dutch stock market that counts Tesla and BMW as some of its flagship clients, the acquisition of DPS will significantly enhance its exposure to multinational clients in the pharma and life science sectors.
“Together, Arcadis and DPS are strongly placed to be a full-service provider for clients in the life science, industrial manufacturing and technology sectors combining our complementary service offerings, expertise and global reach,” Peter Oosterveer, chief executive of the company, told investors last week, adding that he expects the deal to close by the end of this year.
Shares in Arcadis fell almost 5 per cent on the back of the deal being announced.
The sale of DPS will result in a major windfall for a small number of shareholders in the company. Frank Keogh, the chief executive, and Eddie Kent, the chief financial officer, own well over 95 per cent of the company and will be the largest beneficiaries from the sale.
Under the terms of the deal, the Business Post understands, Arcadis will pay €225 million up front, while the remaining €60 million will be paid if a three-year performance clause is met.
“[The sale to Arcadis] marks an important step in the evolution of DPS,” Keogh said.
“Over the past years, we have grown our business into a leader in the life sciences and semiconductor manufacturing sectors. Together with Arcadis we will be able to offer a more comprehensive set of solutions for our clients and continue to grow our business.”
DPS was founded in 1974 and was the subject of a management buyout in 1996 by Keogh and other investors. The company first expanded outside Ireland in 1998 with the establishment of an office in the Netherlands. It has since expanded into Asia and the US, where it has developed a very significant business.
For 2021, the company recorded net revenues of just under €289 million and made profits of €27.4 million. The company has recorded compound annual growth of more than 20 per cent over the last three years, with over half its revenues generated in Europe, while the US accounts for 40 per cent of sales.
In its presentation to investors, Arcadis said DPS has a secured backlog of revenues totalling almost €440 million with almost 90 per cent of revenues generated from contracts from life sciences and pharma companies. About 15 per cent of DPS’s revenues come from semiconductor clients such as Intel.
