Jacobs Engineering Group (NYSE: JEC) has agreed to buy CH2M through an estimated $3.27 billion transaction as both companies aim to deliver additional infrastructure and engineering services to government and private sector clients.
Dallas, Texas-based Jacobs said Wednesday it will pay $2.85 billion in cash and stock for CH2M and assume $416 million in net debt from the Englewood, Colorado-based engineering firm as part of the deal.
Both companies expect to close the transaction during the first quarter of Jacobs’ fiscal year 2018, subject to shareholder and regulatory approvals and other customary closing conditions.
The acquisition would help Jacobs expand its global footprint in transportation, water, nuclear and environmental sectors as well as in the petroleum and chemical industry.
Gary Mandel, newly appointed executive vice president of integration at Jacobs; and Lisa Glatch, EVP for growth and sales at CH2M; will jointly lead the new integration management office established by Jacobs to oversee the merger.
CH2M shareholders will own 15 percent of Jacobs’ shares upon the deal’s closure.
Jacobs will pay 60 percent of the deal’s 2.85 billion equity value in cash along with borrowings under the firm’s revolving credit facility and $1.2 billion of three-year debt arranged by the Bank of Nova Scotia and BNP Paribas.
The transaction would add approximately 15 percent to Jacobs’ adjusted earnings per share and 25 percent to the firm’s adjusted cash earnings per share in the first full year.
Morgan Stanley & Co. and Perella Weinberg Partners LP act as Jacobs’ financial advisers, while Wachtell, Lipton, Rosen & Katz and Fried, Frank, Harris, Shriver & Jacobson LLP serve as legal advisers to the Dallas, Texas-based technical professional services provider.
Credit Suisse and BofA Merrill Lynch act as CH2M’s financial advisers, while Richards, Layton & Finger, P.A. and Latham & Watkins LLP serve as legal counsel to the firm in the deal.