Parsons Corp. aims to boost its role in the growing Canadian transportation market with its April 1 purchase of Delcan, an 800-employee Canadian transportation engineer based near Toronto.

No transaction details were disclosed, but AEC sector analyst Maxim Sytchev of Dundee Capital Markets, Toronto, estimates a purchase price of $75 million to $90 million.

Delcan is a "strategic addition" to Parsons, says the new parent firm, saying transportation is one of its four key target markets.

Kerr

Employee-owned Delcan, with $126 million in 2013 revenue, also works in the U.S., the Middle East and Hong Kong, says Parsons, which had $3 billion in 2013 revenue. Parsons says Delcan CEO Jim Kerr, a 32-year company veteran, will retain his title. His firm becomes a wholly owned subsidiary.

The purchase will "enhance [Parsons'] exposure to a geography where transportation spending is expected to remain buoyant over the medium term," said Sytchev, Dundee managing research director, in an April 2 report. He also noted "the prevalence of the P3 model." The Ottawa Business Journal said on April 2 that Parsons had four local employees in 2012, part of a consortium that was not selected to win its light-rail expansion contract.

Sytchev sees rising provincial transportation budgets.

"In 2014, Alberta and British Columbia are set to spend, respectively, $1.7 billion (up 13% from 2013) and $1.2 billion (up 8%)," he said, with comparable spending likely in 2015. He also expects a total of $7 billion in project spending in Quebec in 2014 and 2015 and hiked transit budgets in Ontario.

The analyst expects "additional M&A in the transport space in Canada as larger E&C firms look to scale up their presence by infilling certain geographies and expertise."