Posted on August 7, 2017
Jacobs Engineering Group Inc. (NYSE:JEC) and CH2M HILL Companies Ltd. today announced that they have entered into a definitive agreement under which Jacobs will acquire all of the outstanding shares of CH2M in a cash and stock transaction with an enterprise value (EV) of approximately $3.27 billion, including approximately $416 million of CH2M net debt.
The combination unites two industry-leading, innovative companies with complementary capabilities, cultures and relationships, resulting in a differentiated, end-to-end value proposition for clients and an enhanced platform for sustainable, profitable growth.
With trailing twelve month (TTM) revenues of $4.4 billion1 and a team of 20,000 employees, CH2M is a world-renowned design, engineering and program management firm, and is a leader in key infrastructure and government service sectors that Jacobs has previously targeted for growth, including water, transportation, environmental and nuclear. Applying CH2M’s advanced design, technical and program management expertise across Jacobs’ global footprint will enable the combined company to deliver more solutions to more clients in both the government and private sector.
“By increasing our industry reach and adding to our already extensive skills, this transaction enhances our value to our clients and bolsters Jacobs’ position as a premier consulting, design, engineering, construction, and operations and maintenance technical services firm. CH2M brings to Jacobs a talented, engaged team with capabilities and values that are very complementary to our own. Together, we will bring more solutions to our clients, give more opportunity to our employees and create increased value for Jacobs’ shareholders. In addition, this transaction is consistent with our M&A criteria, accelerating our ability to achieve our financial growth targets and propelling Jacobs toward our vision of providing innovative solutions for a more connected, sustainable world,” said Steve Demetriou, Jacobs’ Chairman and CEO.
“We are delighted about the prospects of combining CH2M with Jacobs,” said CH2M Chairman and CEO Jacqueline Hinman. “Since late 2014, we’ve been transparent about our plans to pursue an ownership transition, providing sustained access to capital for growth. Considering all of the options, we focused on securing greater opportunities for our employees, delivering superior value to our clients and enhanced value for our stockholders, all while continuing to serve the higher purpose our company is known for, providing sustainable solutions for a better world. Throughout this time, we strengthened our business portfolio and performance, which put us in a position to deliver the best possible value and outcome for the future of the company. This was the unanimous choice of our Board, and the value Jacobs will provide to our stockholders, reflects genuine appreciation for our employees and the world-class work we deliver to our clients.”
Under the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of both companies, CH2M’s stockholders will have the option to elect to receive either $88.08 in cash, 1.6693 shares of Jacobs common stock or a mix of $52.85 in cash and 0.6677 shares of Jacobs common stock subject to proration such that the aggregate consideration paid to CH2M stockholders will equal 60% cash and 40% Jacobs common stock. Following the close of the transaction, CH2M stockholders will own 15% of Jacobs shares on a fully diluted basis based on the number of Jacobs shares outstanding today.
The transaction is not subject to a financing condition. Jacobs expects to finance the $2.4 billion cash required for the transaction through a combination of cash on hand, borrowings under the Company’s existing revolving credit facility and $1.2 billion of new committed 3-year term debt arranged by BNP Paribas and The Bank of Nova Scotia. Jacobs’ post-close liquidity is expected to remain robust at approximately $900 million.
The transaction, which is expected to close in Jacobs’ fiscal 2018 first quarter, is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by CH2M stockholders. Apollo Global Management, LLC (NYSE: APO), which has an approximate 18% voting interest in CH2M, has agreed to vote in favor of the transaction.
Source: ch2m
