Featured Company News – Jacobs Engineering to Acquire CH2M to Create Premier $15 Billion Global Solutions Provider

LONDON, UK / ACCESSWIRE / August 4, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Dallas, Texas based Jacobs Engineering Group Inc. (NYSE: JEC) (“Jacobs”), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=JEC. The Company announced on August 02, 2017, that it has signed an agreement to acquire CH2M HILL, a world-renowned design, engineering and program management firm. As per the agreement, 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’s net debt. For immediate access to our complimentary reports, including today’s coverage, register for free now at:

http://protraderdaily.com/register/

At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on JEC. Go directly to your stock of interest and access today’s free coverage at:

http://protraderdaily.com/optin/?symbol=JEC

Terms of the Acquisition

Pursuant to the agreement, CH2M’s stockholders can 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’s stockholders will equal 60% cash and 40% Jacobs’ common stock. Following the closing of the transaction, CH2M’s stockholders will own 15% of Jacobs’ shares on a fully diluted basis.

Jacobs is likely 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 around $900 million.

Strategic Benefits of the Transaction

Provides Leading Position in Infrastructure, Including Water and Transportation: CH2M has been declared as the top water design firm in the world. By leveraging CH2M’s world-renowned technical expertise in water across Jacobs’ global operating platform and strong project delivery skills, the combined company will have a premier global water business. Water represents an approximate $100 billion opportunity, growing 4% to 5% on a compounded annual rate.
Jacobs to Achieve Significant Business Expansion Opportunities: CH2M’s preeminent brand for program and project delivery in large scale environmental remediation in the nuclear industry coupled with Jacobs’ complementary experience with governmental agencies around the world, create significant business expansion opportunities.
Stronger Partner for Global Government Clients: CH2M’s environmental expertise builds on Jacobs’ existing US Federal client base, positioning the combined company to be a stronger partner for global government clients.
Strengthens Capabilities in Industrials and Petroleum and Chemicals: The transaction combines both companies’ superior engineering skills and proven construction management of high tech facilities to result in clean manufacturing expertise. The transaction also enhances Jacobs’ existing position in the petroleum and chemicals industry by providing additional operational and maintenance capabilities for upstream and midstream clients.

Financial Benefits of the Transaction

Creates Significant Cost Savings: Jacobs expects to achieve $150 million of annual run-rate cost savings by the end of the second year, following the transaction. Savings are expected to come from real estate, optimization of corporate operations, alignment of organizational structures, procurement, and IT systems. Jacobs expects to incur around $225 million in one-time costs to achieve these savings.
Creates Significant Upside Revenue Potential: The combined entity is likely to benefit from CH2M’s proven Program Management/Construction Management (PM/CM) expertise, and is expected to create significant revenue upside potential given the companies’ complementary offerings and cross-sell opportunities.
Transaction Value Represents Attractive Multiple: The transaction value represents an attractive enterprise value multiple of 6.9x TTM adjusted EBITDA, including cost synergies. Excluding the synergy benefits, the transaction enterprise value represents a multiple of 10.1x TTM adjusted EBITDA. TTM adjusted EBITDA through June 2017 for CH2M is $323 million.
Strong Accretion to Jacobs’ Earnings: The transaction is expected to be 25% accretive to Jacobs’ adjusted cash earnings per share and 15% accretive to Jacobs’ adjusted earnings per share in the first full year.
Maintains Jacobs’ Strong Balance Sheet: Post-closure, Jacobs expects to maintain an investment grade credit profile with net debt-to-TTM adjusted EBITDA of 1.9x.
Maintains Jacobs’ Low-Risk Profile: Following the acquisition, 85% of Jacobs’ combined revenue is expected to be derived from projects with reimbursable or lower risk services.

Formation of Integration Management Office to oversee the Integration

Jacobs has formed an Integration Management Office (IMO), led by senior executives from both companies, to oversee the integration of the two companies. Gary Mandel, Jacobs’ President of Petroleum & Chemicals, has been appointed Executive Vice President of Integration for Jacobs, and Lisa Glatch, Executive Vice President for Growth and Sales at CH2M. In addition, Jacobs has hired a leading 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.

Senior Management Views

Steve Demetriou, Jacobs’ Chairman, and CEO, stated:

“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.”

Commenting on the acquisition, Jacqueline Hinman, CH2M Chairman, and CEO, said:

“We are delighted about the prospects of combining CH2M with Jacobs. 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.”

Approvals from Shareholders and Regulatory Bodies

The transaction is subject to customary closing conditions and regulatory approvals, including approval by CH2M’s stockholders. It has been unanimously approved by the shareholders of Jacobs Engineering Group. Apollo Global Management, LLC (NYSE: APO), with approximate 18% voting interest in CH2M, has agreed to vote in favor of the acquisition. The transaction is expected to close in Jacobs’ fiscal Q1 2018.

Last Close Stock Review

On Thursday, August 03, 2017, Jacobs Engineering’s stock closed the trading session at $52.67, declining 1.27% from its previous closing price of $53.35. A total volume of 1.66 million shares were exchanged during the session, which was above the 3-month average volume of 876.60 thousand shares. Shares of the Company have a PE ratio of 30.60 and have a dividend yield of 1.14%. The stock currently has a market cap of $6.42 billion.

Pro-Trader Daily:

Pro-Trader Daily (Pro-TD) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and Canadian stocks. PRO-TD has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles, and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below.

PRO-TD has not been compensated; directly or indirectly; for producing or publishing this document.

PRESS RELEASE PROCEDURES:

The non-sponsored content contained herein has been prepared by a writer (the “Author”) and is fact checked and reviewed by a third party research service company (the “Reviewer”) represented by a credentialed financial analyst [for further information on analyst credentials, please email contact@protraderdaily.com. Rohit Tuli, a CFA® charter holder (the “Sponsor”), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by PRO-TD. PRO-TD is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way.

NO WARRANTY

PRO-TD, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. PRO-TD, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, PRO-TD, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.

NOT AN OFFERING

This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither PRO-TD nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://protraderdaily.com/disclaimer/.

CONTACT

For any questions, inquiries, or comments reach out to us directly. If you’re a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at:

Email: contact@protraderdaily.com

Phone number: (917) 341.4653

Office Address: Mainzer Landstrasse 50 Frankfurt am Main, Germany 60325

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

SOURCE: Pro-Trader Daily

ReleaseID: 471174