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Wednesday, August 02, 2017
Dallas' Jacobs to buy Denver-based rival in $3.27B deal
The deal comes on the heels of rumors circulating that Jacobs was considering the acquisition, but was also weighing some of CH2M's outstanding liabilities. In the deal, Jacobs will acquire all the outstanding shares of CH2M in a cash and stock deal valued at $3.27 billion, which includes about $416 million of debt.
The deal will help Jacobs increase its industry reach and bolster the firm's position as a premier consulting, design, engineering and construction firm, said Jacobs Chairman and CEO Steve Demetriou.
"Together, we will bring more solutions to our clients, give more opportunity to our employees and create increased value for Jacobs' shareholders," Demetriou said, in a statement. "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."
In the last 12 months, CH2M posted revenues of $4.4 billion with about 20,000 employees. The design, engineering and project management firm has become a leader for infrastructure and government services work, which Jacobs had previously targeted for growth, including water, environmental, transportation and nuclear.
The Denver firm has been seeking an ownership transition since late 2014 with an eye on providing sustained access to capital for growth, said CH2M Chairman and CEO Jacqueline Hinman.
Hinman added the firm's board of directors was unanimously behind the choice of being acquired by Jacobs.
Meanwhile, Jacobs expects to achieve a $150 million annual run-rate cost savings by the end of the second year following the close of the deal. That savings is expected to come from real estate, optimized corporate operations, procurement and IT systems.
With the deal, Jacobs expects to incur a one-time cost of about $225 million to achieve these savings.
The deal also will allow Jacobs to serve more clients throughout the world and offer additional capabilities, such as CH2M's strong water capabilities, to its existing clients.
Demetriou said Jacobs will leverage lessons it has learned from past experiences and plans to retain talent and build on the strong culture foundations of both companies.
"Jacobs and CH2M have complementary cultures and shared values that put people at the heart of the business," said Demetriou, in a statement. "With this foundation and the clear integration plan we have developed, we expect to successfully bring our companies together."