Dallas, Texas-based Jacobs Engineering Group Inc. and CH2M HILL Cos. Ltd. announced they have entered into a definitive agreement where Jacobs will acquire all of the outstanding shares of CH2M in a cash and stock transaction with an enterprise value of approximately $3.27 billion, including approximately $416 million of CH2M net debt.
Colorado-based CH2M is a design, engineering and program management firm, and a leader in key infrastructure and government service sectors that Jacobs has previously targeted for growth, including water, transportation, environmental and nuclear, according to the announcement.
“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,” said Steve Demetriou, Jacob chairman and CEO. “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.”
“Since late 2014, we’ve been transparent about our plans to pursue an ownership transition, providing sustained access to capital for growth,” said CH2M Chairman and CEO Jacqueline Hinman. “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.”
Boards of both companies have approved the acquisition, as well as CH2M’s largest shareholder, Apollo Global. The transaction is expected to close in the fourth quarter of 2017.
According to Vertical Research Partners analyst Mike Dudas, the acquisition would add environment, nuclear and water to Jacob’s existing industrial focus, and enhance its geographic footprint in Canada and U.K. It would also provide Jacobs with better exposure to high infrastructure and government and state customers, he added.
As part of the acquisition, Jacobs has formed an Integration Management Office (IMO) to oversee the integration of the two companies. The IMO will be jointly led on a full-time basis by senior executives from both companies. Gary Mandel, who joined Jacobs six years ago through the Aker Solutions Process & Construction acquisition, and most recently served as Jacobs president of Petroleum and Chemicals, has been appointed to lead the integration for Jacobs. In addition, Jacobs announced that Vinayak Pai has been appointed interim head of global Petroleum & Chemicals.