Jacobs Solutions (NYSE: J) has agreed to spin off and merge its critical mission solutions and cyber and intelligence businesses with Amentum to form a new publicly traded government technology services contractor.
The transaction will create an independent company with an annual revenue of approximately $13 billion, a stable base of prime government contracts, a combined backlog of about $50 billion and a workforce of more than 53,000 employees, including over 27,000 cleared personnel, the companies said in a joint release published Monday.
Upon the deal’s closing, Jacobs Executive Chair Steve Demetriou will serve as executive chair of the combined entity.
The merger will be carried out through a Reverse Morris Trust transaction and is expected to conclude in the second half of fiscal year 2024, subject to regulatory approvals and other customary closing conditions.
“Our combined company will deliver extensive expertise in the government’s highest priority areas of energy, space exploration, intelligence and analytics, and digital modernization,” Heller said.
Shareholders at Jacobs will own up to 63 percent of the combined entity. The company is expected to secure $1 billion in cash proceeds and realize net cost synergies of between $50 million and $70 million.
Jacobs will retain the data solutions and digital technologies portions of its Divergent Solutions business and will continue to focus on helping customers address critical infrastructure and sustainability challenges in the energy transition, water and environment, transportation and advanced manufacturing areas.
“By separating CMS and associated Cyber & Intelligence Solutions, Jacobs will streamline our business portfolio and transform into a more focused, higher-margin company more closely aligned with key global mega trends,” said Jacobs CEO Bob Pragada.
The deal came days after reports emerged that Jacobs was in advanced talks over the possible merger of its CMS business with Amentum.
In May, Jacobs announced plans to spin off its CMS business into an independent company that will focus on delivering applied science research, technical consulting, program management, training and intelligent asset management support services to federal government customers.
Centerview Partners and Perella Weinberg Partners serve as Jacobs’ financial advisers and Wachtell Lipton, Rosen & Katz acts as legal counsel to the Dallas-based technical professional services firm. The board of directors at Jacobs has tapped Goldman Sachs & Co. to serve as its financial adviser.
J.P. Morgan Securities and Morgan Stanley & Co. advise Amentum on the deal’s financial aspect. Cravath, Swaine & Moore serves as the company’s legal adviser.