- Extends Complementary Capabilities
Across Jacobs’ Global Platform to Deliver Differentiated Client
Value Proposition and Accelerate Profitable Growth
- Provides Jacobs with Leading Position
and New Expertise in Targeted High Margin, High Growth
Infrastructure and Government Services Sectors, Which Will
Represent 56% of Pro Forma Revenue Compared to 45% Currently
- Transaction Equity Value of $2.85
Billion to be Paid 60% in Cash and 40% in Jacobs Common Stock
- $150 Million in Annual Cost Synergies
Expected
- Enterprise Value Multiple of 6.9x TTM
Adjusted EBITDA, Including Full Run-Rate of Cost Synergies
- Expected to be 25% Accretive to Jacobs’
Adjusted Cash Earnings Per Share and 15% Accretive to Adjusted
Earnings Per Share in the First Full Year Post-Close
- Maintains Jacobs’ Investment Grade
Credit Profile with Net Debt-to-TTM Adjusted EBITDA of 1.9x
Following Close of Transaction
Jacobs Engineering Group Inc. (NYSE:JEC) and CH2M HILL Companies
Ltd. today announced that they have entered into a definitive
agreement under which 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 net debt.
This Smart News Release features multimedia.
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The combination unites two industry-leading, innovative
companies with complementary capabilities, cultures and
relationships, resulting in a differentiated, end-to-end value
proposition for clients and an enhanced platform for sustainable,
profitable growth.
With trailing twelve month (TTM) revenues of $4.4 billion1 and a
team of 20,000 employees, CH2M is a world-renowned design,
engineering and program management firm, and is a leader in key
infrastructure and government service sectors that Jacobs has
previously targeted for growth, including water, transportation,
environmental and nuclear. Applying CH2M’s advanced design,
technical and program management expertise across Jacobs’ global
footprint will enable the combined company to deliver more
solutions to more clients in both the government and private
sector.
“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. 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,” said Steve Demetriou, Jacobs’ Chairman and
CEO.
“We are delighted about the prospects of combining CH2M with
Jacobs,” said CH2M Chairman and CEO Jacqueline Hinman. “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.”
Compelling Strategic Benefits: Advancing Jacobs’ Strategy to
Grow in High Margin, High Growth Business Lines2
- Provides Leading Position in
Infrastructure, Including Water and Transportation: Water
represents an approximate $100 billion opportunity, growing 4% to
5% on a compounded annual rate. Engineering News-Record has
identified CH2M 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 with the scale, critical mass and experience needed
to more fully capitalize on industry growth trends.
Jacobs is already a global leader in the resource-constrained
$300 billion transportation sector, which includes highways, rail,
aviation and ports, and is growing 4% to 5% on a compounded annual
rate. This sector has large spend and significant momentum given
population growth and associated need for all transportation modes
in multiple geographies, particularly in the United States,
Australia, New Zealand, Southeast Asia, the Middle East and the
United Kingdom. Jacobs’ premier position in transportation with
CH2M is expected to make the combined company an employer of
choice, enabling it to better attract and retain talent and address
the sector’s resource constraints. Capitalizing on Jacobs’ and
CH2M’s combined talent, resources and scale creates a unique
opportunity to better serve clients and improve the quality and
dependability of their infrastructure.
- Better Positions Jacobs to Achieve
Significant Growth in the Government Services Sector by
Establishing Jacobs as a Tier 1 Service Provider to the Global
Nuclear Industry and Significantly Expanding its Environmental
Capabilities: Nuclear represents an approximate $145 billion
opportunity, growing 2% to 3% on a compounded annual basis, with
nuclear-related projects requiring specialized capabilities that
are difficult to replicate. 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, including nuclear
decommissioning, create significant business expansion
opportunities.
Environmental work represents an approximate $160 billion
opportunity, growing 4% to 5% on a compounded annual rate. The
combined company will have among the broadest and deepest
environmental capabilities in the industry. In addition, CH2M’s
environmental expertise builds on Jacobs’ existing U.S. Federal
client base, positioning the combined company to be a stronger
partner for global government clients. Further, this leading
environmental capability, from planning and permitting to
remediation, is transferable across Jacobs’ private sector client
base, creating the opportunity for substantial upside potential for
the combined company.
- Strengthens Capabilities in
Industrials, and Petroleum and Chemicals: In Industrials, the
transaction combines both companies’ superior engineering skills
and proven construction management of high tech facilities to
result in world-class, clean manufacturing expertise. This
differentiated, end-to-end offering will better position Jacobs to
respond to cyclical customer requirements in this sector.
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 and enabling infrastructure for major petroleum and
chemicals projects.
Compelling Financial Benefits: Delivering on Jacobs’ M&A
Framework
- 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
close of 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 approximately $225 million in one-time costs to
achieve these savings.
- Creates Significant Upside Revenue
Potential: Through this transaction, Jacobs expects to serve
more clients with more solutions in more geographies around the
world. This differentiator, combined with CH2M’s proven Program
Management / Construction Management (PM/CM) expertise, is expected
to create significant revenue upside potential given the companies’
complementary offerings and cross-sell opportunities. For example,
following the close of the transaction, Jacobs will be able to
offer CH2M’s water capabilities to existing Jacobs clients,
deepening the company’s relationships in this growing sector and
expanding Jacobs’ scope of work.
- Transaction Value Represents
Attractive Multiple: The transaction value represents an
attractive enterprise value multiple of 6.9x TTM adjusted EBITDA3,
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 million3.
- 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
post-close4.
- Maintains Jacobs’ Strong Balance
Sheet and Financial Flexibility: Following the close of the
transaction, Jacobs expects to maintain an investment grade credit
profile with net debt-to-TTM adjusted EBITDA of 1.9x.
- Maintains Jacobs’ Low-Risk
Profile: Post-close, 85% of Jacobs’ combined revenue is
expected to be derived from projects with reimbursable or lower
risk services – continuing to be one of the best risk profiles in
the industry.
Comprehensive, Focused, Disciplined Integration Plan
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, including, as announced separately
today, Gary Mandel, most recently Jacobs President of Petroleum
& Chemicals, who 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.
Rigorous integration processes and protocols are being established
to ensure transparency and accountability for synergy capture.
Jacobs’ executive leadership team will be actively involved in
integration planning with the Company’s Board of Directors engaged
in oversight. At the close of the transaction, Jacobs’ Board will
be expanded to include an additional director from CH2M.
In connection with integration planning, Demetriou continued,
“Jacobs is leveraging lessons learned from past experiences and is
focused on critical success factors, including retaining talent,
building on the strong culture foundations of both companies,
ensuring base business performance, and developing and delivering
cost and growth synergies.
“Jacobs and CH2M have complementary cultures and shared values
that put people at the heart of the business. With this foundation
and the clear integration plan we have developed, we expect to
successfully bring our companies together. We admire CH2M’s
engaging culture and look forward to coming together as we work to
realize the full benefits of a united team.”
Terms and Financing
Under the terms of the merger agreement, which has been
unanimously approved by the Boards of Directors of both companies,
CH2M’s stockholders will have the option to 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
stockholders will equal 60% cash and 40% Jacobs common stock.
Following the close of the transaction, CH2M stockholders will own
15% of Jacobs shares on a fully diluted basis based on the number
of Jacobs shares outstanding today.
The transaction is not subject to a financing condition. Jacobs
expects 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 approximately $900 million.
Approvals
The transaction, which is expected to close in Jacobs’ fiscal
2018 first quarter, is subject to the satisfaction of customary
closing conditions, including regulatory approvals and approval by
CH2M stockholders. Apollo Global Management, LLC (NYSE: APO), which
has an approximate 18% voting interest in CH2M, has agreed to vote
in favor of the transaction.
Advisors
Perella Weinberg Partners LP and Morgan Stanley & Co. LLC
are serving as financial advisors to Jacobs. Fried, Frank, Harris,
Shriver & Jacobson LLP and Wachtell, Lipton, Rosen & Katz
are serving as legal counsel to Jacobs.
BofA Merrill Lynch and Credit Suisse are serving as financial
advisors to CH2M. Latham & Watkins LLP and Richards, Layton
& Finger, P.A. are serving as legal counsel to CH2M.
Jacobs Conference Call and Webcast
Jacobs will host a conference call today, August 2, 2017, at
7:30 A.M. CT / 8:30 A.M. ET to discuss this announcement with the
financial community. The conference call can be accessed by dialing
(833) 231-8270 (U.S./Canada) or (647) 689-4115 (International) and
giving the passcode 65134301. A replay of the call will be
available from August 2, 2017 until August 8, 2017 by dialing (800)
585-8367 (U.S./Canada) or (416) 621-4642 (International) and by
entering the passcode 65134301.
Interested parties can listen to the conference call and view
accompanying slides on the internet at www.Jacobs.com.
CH2M Conference Call and Webcast
CH2M will host a special Stockholder Call today, August 2, 2017,
at 10:00 A.M. MT / 12:00 P.M. ET, to discuss the details of its
proposed combination with Jacobs. Further information about how to
participate may be found at ir.ch2m.com.
Note to Editors: Additional information about the
transaction can be found at www.Jacobs.com/CH2M.
About Jacobs
Jacobs is one of the world’s largest and most diverse providers
of full-spectrum technical, professional and construction services
for industrial, commercial and government organizations globally.
The company employs over 54,000 people and operates in more than 25
countries around the world. For more information, visit
www.jacobs.com.
About CH2M
More than 20,000 employees strong, CH2M leads the professional
services industry delivering sustainable solutions to promote
positive societal, environmental and economic outcomes through the
delivery of infrastructure. CH2Mers make a positive difference
providing consulting, design, engineering, operations and
maintenance, and program management services for clients needing
world-class solutions in environmental; industrial and advanced
facilities; transportation; and water, from iconic infrastructure
like the Panama Canal to the 2012 Olympic Games in London.
Ranked among the World’s Most Ethical Companies and top firms in
environmental consulting and program management, CH2M is the only
firm in the engineering and construction industry to receive
several prestigious awards, such as the World Environment Center
Gold Medal Award for International Corporate Achievement in
Sustainable Development, the Stockholm Industry Water Award for its
leadership in potable water reuse, and the Catalyst Award for our
success in recruiting, developing and advancing women in the
workplace. Connect with CH2M at www.ch2m.com; LinkedIn; Twitter;
and Facebook.
Forward Looking Statements
Certain statements contained in this document constitute
forward-looking statements as such term is defined in Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and such statements
are intended to be covered by the safe harbor provided by the same.
Statements made in this press release that are not based on
historical fact are forward-looking statements, including
statements regarding whether and when the proposed transaction
between Jacobs and CH2M will be consummated and the anticipated
benefits thereof. Although such statements are based on
management's current estimates and expectations, and currently
available competitive, financial, and economic data,
forward-looking statements are inherently uncertain, and you should
not place undue reliance on such statements as actual results may
differ materially. We caution the reader that there are a variety
of risks, uncertainties and other factors that could cause actual
results to differ materially from what is contained, projected or
implied by our forward-looking statements. The potential risks and
uncertainties include, among others, the possibility that CH2M may
be unable to obtain required stockholder approval or that other
conditions to closing the transaction may not be satisfied, such
that the transaction will not close or that the closing may be
delayed; general economic conditions; the possibility of unexpected
costs, liabilities or delays in connection with the transaction;
risks that the transaction disrupts current plans and operations of
the parties to the transaction; the ability to recognize the
benefits of the transaction; the amount of the costs, fees,
expenses and charges related to the transaction and the actual
terms of any financings that will be obtained for the transaction;
the outcome of any legal proceedings related to the transaction;
the occurrence of any event, change or other circumstances that
could give rise to the termination of the transaction agreement.
For a description of some additional factors that may occur that
could cause actual results to differ from our forward-looking
statements see Jacobs’ Annual Report on Form 10-K for the period
ended September 30, 2016, and CH2M’s Annual Report on
Form 10-K for the period ended December 30, 2016 and in
particular ”Risk Factors” discussing thereunder, as well as Jacobs’
and CH2M’s other filings with the Securities and Exchange
Commission. Neither Jacobs nor CH2M is under any duty to update any
of the forward-looking statements after the date of this press
release to conform to actual results, except as required by
applicable law.
Additional Information and Where to Find It
In connection with the proposed acquisition of CH2M by Jacobs
pursuant to the terms of an Agreement and Plan of Merger by and
among CH2M, Jacobs and Basketball Merger Sub Inc., a wholly owned
subsidiary of Jacobs (“Merger Sub”), Jacobs intends to file with
the Securities and Exchange Commission (the “SEC”) a Registration
Statement on Form S-4 (the “Form S-4”) that will contain a proxy
statement of CH2M and a prospectus of Jacobs, which proxy
statement/prospectus will be mailed or otherwise disseminated to
CH2M’s stockholders when it becomes available. BEFORE MAKING ANY
VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO READ THE
PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND
SUPPLEMENTS) BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
JACOBS, CH2M AND THE MERGER. Investors may obtain free copies of
the proxy statement/prospectus when it becomes available, as well
as other filings containing information about Jacobs and CH2M,
without charge, at the SEC’s Internet website (http://www.sec.gov).
Copies of these documents may also be obtained for free from the
companies’ websites at www.jacobs.com or www.ch2m.com
Participants in Solicitation
Jacobs, CH2M and their respective officers and directors may be
deemed to be participants in the solicitation of proxies from the
stockholders of CH2M in connection with the proposed Merger of
Merger Sub with and into CH2M. Information about Jacobs’ executive
officers and directors is set forth in its Annual Report on Form
10-K, which was filed with the SEC on November 22, 2016 and its
proxy statement for its 2017 annual meeting of stockholders, which
was filed with the SEC on December 9, 2016. Information about
CH2M’s executive officers and directors is set forth in its Annual
Report on Form 10-K, which was filed with the SEC on March 7, 2017,
and the proxy statements for its 2017 annual meeting of
stockholders, which was filed with the SEC on April 24, 2017.
Investors may obtain more detailed information regarding the direct
and indirect interests of Jacobs, CH2M and their respective
executive officers and directors in the acquisition by reading the
preliminary and definitive proxy statement/prospectus regarding the
proposed transaction when it is filed with the SEC. When available,
you may obtain free copies of these documents as described in the
preceding paragraph.
No Offer or Solicitation
This press release relates to a proposed business combination
between Jacobs and CH2M. This press release is for informational
purposes only and shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such jurisdiction.
This document is not a substitute for the prospectus or any other
document that Jacobs or CH2M may file with the SEC in connection
with the proposed transaction. No offering of securities shall be
made, except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended.
1 Pro forma for the deconsolidation of CNEA JV (a large nuclear
project in a consolidated Canadian joint venture)
2 Source for all business line opportunity figures: Internal
assessment and third-party research
3 TTM as of June 2017; excludes restructuring charges and
Inpex/MOPAC changes in project estimates
4 Adjusted cash earnings per share and adjusted earnings per
share exclude transaction and integration costs. Adjusted earnings
per share also excludes estimated amortization of intangibles
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170802005550/en/
Jacobs Engineering Group Inc.Mendi HeadVice President, Global
Communications214-920-8015 - office972-743-7699 -
mobilemendi.head@jacobs.comorMediaJoele Frank, Wilkinson
Brimmer KatcherBarrett Golden or Joseph
Sala212-355-4449orInvestorsJonathan DorosVice President,
Investor Relations214-583-8596 –
office817-239-3457jonathan.doros@jacobs.comorCH2M Corporate
CommunicationsLorrie Paul Crum720-286-0255 – office303-525-2916 –
mobilelorrie.crum@ch2m.com
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