Stantec to Buy ADD to Leverage Building Demand on East Coast - Analyst Blog

North American design and consulting giant Stantec Inc. ( STN ) signed a letter of intent for acquiring ADD Inc, a 210-person architectural firm based in Boston. The deal, expected to reinforce Stantec's East Coast operations, will likely conclude in September. Other terms of the deal were kept under wraps.

ADD specializes in designing tiny but efficient micro apartments. It has also designed quite a few outstanding Boston-area buildings, like the Massachusetts College of Art's "Tree House" residence building and the One Channel Center, a new office building in the South Boston waterfront occupied by State Street Corp,

ADD's capabilities include remarkable projects in commercial development, hospitality, workplace design, retail, mixed-use housing and academic institutions.

Stantec intends to capitalize on the lucrative growth opportunities available in the urban centers of North America. To this end, the company decided to acquire ADD so as to strengthen its Buildings business line in the eastern U.S. ADD's existing foothold in the area will provide Stantec with a platform to leverage the growth prospects offered by the region.

With the two companies specializing in different areas, both will benefit from each other's complementary capabilities. For instance, in the college market, Stantec specializes in science and technology spaces while ADD has expertise in residential and student life facilities.

While Stantec will gain from ADD's building faculties and expertise, ADD stands to benefit from the former's diverse operations and access to new markets. Also, Stantec's scale of operations will make ADD more resilient to market fluctuations.

If the deal closes successfully, the resulting entity will be reportedly involved in numerous significant developments in the Boston area, specifically in Boston's so-called "Innovation District" and the fast-growing Assembly Square area of Somerville.

Stantec currently has a Zacks Rank #3 (Hold). Other better-ranked stocks in the consulting industry that are worth a look include FTI Consulting, Inc. ( FCN ), Gartner Inc. ( IT ) and CRA International Inc. ( CRAI ), each sporting a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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