Stantec STN announced the acquisition of Morrison Hershfield on Jan 9. The acquisition is expected to be closed by the first quarter of 2024. It fosters collaboration on projects with a shared understanding of market dynamics and client needs, thus enabling both firms to capitalize on significant infrastructure project opportunities.

Stantec has gained 20.2% in the past six months, outperforming its industry’s 9.3% growth and S&P 500 composite’s 6.1% rise in the same time frame.

Morrison Hershfield, an Ontario-based engineering and management firm, specializes in transportation, buildings and environmental services. With 1,150 employees across Canada, the United States and India, it brings expertise in infrastructure, data center engineering and environmental impact assessment. The firm's client-focused approach and top-tier reputation contribute to its prominence in the industry.

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What the Acquisition Brings for Stantec

Stantec considers acquisition a crucial strategy for fostering growth. Through this approach, the company aims to introduce diversified offerings, strengthen its existing businesses, expand its geographical presence and augment its employee base.

The acquisition checks all the boxes as it offers significant benefits. Morrison Hershfield's expertise in engineering and management, particularly in transportation, buildings and environmental services, complements Stantec's existing services. This synergy allows for a broader range of offerings and increased capabilities, especially in areas like Horizontal Infrastructure and Buildings engineering. Morrison Hershfield's Horizontal Infrastructure business doubles Stantec's transportation presence in Ontario, strengthening its capabilities in bridge, highway, construction administration, program management and inspection services.

Morrison Hershfield's strong presence in Canada, particularly in major markets, will expand Stantec's reach and enhance its Canadian workforce by approximately 10%. The acquisition strengthens Stantec's position in key growth markets, including the Greater Toronto Area, and provides a foothold in Western Canada. This diversification helps Stantec tap into new opportunities and fortifies its market presence.



STN currently carries a Zacks Rank #2 (Buy).

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