Tetra Tech acquires RPS Group to expand global operations

PASADENA, Calif.–(BUSINESS WIRE)–Tetra Tech, Inc. (NASDAQ: TTEK), a leading provider of premium consulting and engineering services, is pleased to announce that it has reached an agreement with RPS Group plc (“RPS Group”) on the terms of an all-cash acquisition of RPS Group for 222 pence per share (the “Acquisition”). The Acquisition has been unanimously recommended by the Board of Directors of RPS Group.

The combined 26,000 associates of RPS Group and Tetra Tech will establish a leading global consultancy in water, environment, sustainable infrastructure and energy transformation. The RPS Group employs 5,000 people in Europe, the UK, Asia-Pacific and North America, providing high-end solutions, including in energy transformation, water and program management for government and commercial customers. Tetra Tech is a premium global consultancy ranked #1 in water and environmental management, as published in News-Record Engineering. Its 21,000 associates are technical experts capable of carrying out more than 70,000 projects per year worldwide.

The RPS Group significantly expands Tetra Tech’s water practice in the UK and strengthens Tetra Tech’s leadership position in renewable energy and environmental management. This combination further strengthens our geographic presence in the UK, EU and Australia. The RPS Group and Tetra Tech are culturally aligned and will together use a Lead with science® approach to solving critical issues such as climate change, resilience and energy transformation. The combination of RPS Group and Tetra Tech also advances both companies’ strategies to provide premium consulting with a focus on advanced data analytics and unique software applications, such as those for water, ocean analysis and contaminant modelling.

“RPS Group is advancing our long-term strategy to strengthen our position as the world’s leading premium consulting and engineering firm focused on water, environment, sustainable infrastructure and energy transformation.” said Dan Batrack, president and CEO of Tetra Tech. “We invite RPS Group associates to join us and collectively leverage our long-term client relationships and project experience. As a global consulting firm committed to high-end solutions, we can offer our extended team of associates even greater professional opportunities.

Ken Lever, Non-Executive Chairman of RPS, said, “The RPS Board of Directors is pleased to recommend Tetra Tech’s offer, which provides our shareholders with even greater value for their shares. Our association with Tetra Tech will provide attractive opportunities and long-term benefits to our global associates and customers.

Additionally, John Douglas, Managing Director of RPS, explained, “Joining Tetra Tech represents a very attractive combination of two industry-leading companies for our customers and provides an ideal opportunity for our employees to achieve RPS’s goals of contributing significantly to the world’s most complex problems of energy transformation and water management in the world. I am very excited about the future of our combined company and the benefits for our employees and customers. By coming together, Tetra Tech provides RPS and its employees with a strong, culturally aligned platform that creates a preeminent consulting and engineering firm addressing climate change and all of its effects.

The transaction

It is intended that the Acquisition will be implemented by way of a court-sanctioned plan of arrangement (the “Plan”) pursuant to Part 26 of the UK Companies Act 2006. The purpose of the Scheme is to enable Tetra Tech to indirectly own all of the issued and to be issued share capital of RPS Group.

Details of the proposed acquisition will be sent to RPS Group shareholders within 28 days of the date of this announcement (unless the Panel on Takeovers and Mergers under the UK City Code on Takeovers and Mergers decides otherwise). Subject to, among other things, the satisfaction or waiver of the conditions, the approval of the Scheme by the shareholders of the RPS group, the receipt of applicable regulatory approvals and the sanction of the Scheme of arrangement by the Court, it The Acquisition is expected to close by the end of 2022.

For further details of the proposed Acquisition, readers are referred to the firm offer announcement relating to the Acquisition (the “Announcement”) previously published in the United Kingdom on the date hereof in accordance to rule 2.7 of the UK City Code on Takeovers and Mergers and which can be found on the Tetra Tech website at tetratech.com/investor-offer. The announcement and other material documents (including, among others, the New Credit Facility (as defined below)) are also attached as exhibits to Tetra Tech’s current report on Form 8-K filed. filed with the SEC concurrently with this release. Please note that this 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 entire Announcement in connection with this release, which is subject to the full text of the Announcement in all respects.

The acquisition is expected to be medium to high accretive to adjusted earnings per share (EPS) after realizing the full benefit of an expected £21 million of cost synergies and integration into Tetra Tech. The cost of realizing these synergies is estimated at £16 million and would be largely incurred in the first twelve months following closing. Adjusted EPS excludes one-time transaction-related costs and amortization of intangible assets.

All relevant documentation will be available on the Tetra Tech website at tetratech.com/investor-offer.

Acquisition financing

In conjunction with the announcement of the acquisition, Tetra Tech secured “certain funds” of £714 million (approximately $800 million) plus a new credit facility of $350 million, which includes commitments for the total amount of the purchase price for the acquisition value. of the entire issued and to be issued share capital of RPS. Bank of America, NA is acting as the sole administrative agent and lender for the new credit facility.

The new credit facility is designed to ensure compliance with “certain funds” requirements from the announcement of the acquisition under the UK City Code on Takeovers and Mergers. In addition, the acquisition financing plan has been designed and structured with a view to preserving Tetra Tech’s credit profile.

The New Credit Facility contains representations, warranties, conditions precedent, covenants, leverage and events of default that are customary for a transaction of this nature.

Approvals and recommendation

RPS Group’s board of directors unanimously recommended the acquisition.

Tetra Tech has also received undertakings and letters of intent from certain majority RPS Group shareholders to vote in favor of the transaction at general meetings of RPS Group shareholders to be convened under the Scheme, to an aggregate number of RPS Group shares representing in aggregate approximately 28% of the existing issued share capital of RPS Group on September 23, 2022.

Financial and legal advisors

BofA Securities is acting as financial advisor to Tetra Tech in connection with the acquisition. Legal advice is provided to Tetra Tech by Hogan Lovells International LLP.

About RPS Group

RPS Group is a limited company registered in England and Wales. RPS Group shares are listed on the official list of the London Stock Exchange. Founded in 1970 and built on a heritage of environmental and social commitment, RPS Group is a diversified and well-recognized global professional services firm of approximately 5,000 talented employees.

As a technology-based consultancy operating across multiple industries, RPS Group provides specialist services to public and private sector clients, with an emphasis on front-end consulting. RPS Group creates shared value for all stakeholders by solving important problems in a complex, urbanized and resource-scarce world and focuses its expertise on the parts of the project lifecycle that have the greatest impact on project results. with a strong sustainability program. RPS Group has been widely recognized in this regard, having been ranked number one in the UK for climate change and energy consultancy by Environment Analysis for 2019/2020, one of the top 200 environmental companies by Engineering News- Record in 2021 and recognized in 2021 as one of the first “carbon champions” by the Institution of Civil Engineers.

RPS Group operates in approximately 100 offices in 12 countries, with more than 99% of its net sales in fiscal year 2021 generated by its operations in OECD countries. The majority of its net revenue in fiscal 2021 was generated by its operations in the United Kingdom, Australia and the United States.

About Tetra Tech

Tetra Tech is a leading provider of high-end consulting and engineering services for projects around the world. With 21,000 associates working together, Tetra Tech provides clear solutions to complex issues in water, environment, sustainable infrastructure, renewable energy and international development. We are Lead with science® provide sustainable and resilient solutions to our customers. For more information about Tetra Tech, please visit tetratech.com or follow us on LinkedIn, Twitterand Facebook.

All statements made in this release that are not based on historical fact are forward-looking statements. All forward-looking statements made in this release represent management’s best judgment as to what may occur in the future. However, Tetra Tech’s actual results are not guaranteed and are subject to certain risks, uncertainties and assumptions (“Future Factors”), and may differ materially from what is expressed. For a description of future factors that could cause actual results to differ materially from these forward-looking statements, see the discussion under the “Risk Factors” section included in Forms 10-K and 10-Q filed by Tetra Tech with the US Securities and Exchange Commission.

Except as required by applicable law or regulation, Tetra Tech expressly disclaims any obligation or undertaking to issue updates or revisions to any forward-looking statements contained in this release to reflect any changes in Tetra Tech’s expectations as to this regard or any change in events, conditions or circumstances on which any such statement is based.

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