All of the outstanding shares of CH2M will be acquired by Jacobs in the cash and stock transaction, made up of an equity value of US$2.85bn (£2.16bn) and US$416m (£315m) of CH2M net debt. The equity value will be paid 60% in cash and 40% in Jacobs common stock.
Design, engineering and program management firm CH2M has trailing twelve-month (TTM) revenues of US$4.4bn and has 20,000 employees.
Jacobs already employs more than 54,000 people and operates in more than 25 countries around the world. It regards CH2M as a leader in key infrastructure and government service sectors that it has previously targeted for growth, including water, transportation, environmental and nuclear.
The transaction is expected to close in the first quarter of Jacobs’ 2018 fiscal year.
“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 Jacobs chairman and CEO Steve Demetriou.
“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.”
CH2M chairman and CEO Jacqueline Hinman said: “We are delighted about the prospects of combining CH2M with Jacobs,” said. “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.”
The acquisition is expected to create US$150m in annual cost synergies. Savings are expected to come from property, optimisation of corporate operations and the alignment of organisational structures, procurement and IT systems. Jacobs expects to incur approximately US$225m in one-time costs to achieve these savings.
Jacobs has formed an Integration Management Office (IMO) to oversee the integration of the two companies. The IMO will be jointly led by senior executives from both companies on a dedicated, full-time basis. In addition, Jacobs has hired an independent consulting firm to support the integration. At the close of the transaction, Jacobs’ board will be expanded to include an additional director from CH2M.