DALLAS, April 22, 2019 /PRNewswire/ -- Jacobs (NYSE: JEC)
today announced that they have entered into a definitive merger
agreement pursuant to which Jacobs will acquire KeyW for
$11.25 per share in cash. The
transaction has an enterprise value, net of tax assets, of
approximately $815 million, including
an estimated $272 million of KeyW net
debt. The transaction value represents an enterprise
value-to-expected 2020 adjusted EBITDA multiple of approximately
10x, assuming full run-rate cost synergies of $15 million.
This transaction directly aligns with Jacobs' Aerospace,
Technology and Nuclear (ATN) transformational strategy of
delivering innovative and unique, mission-oriented solutions for
highly technical and high consequence government priorities, and
further positions Jacobs as a leader in high-value Government
Services. It allows ATN to expand further its leading portfolio of
innovative solutions to its clients. This is a significant step for
both companies and unites complementary capabilities, cultures and
relationships, and proprietary technology and products to
accelerate Jacobs' profitable growth strategy.
KeyW is a leading national security provider of advanced
engineering and technology solutions for the Intelligence, Cyber
and Counterterrorism communities. KeyW brings a unique and
differentiated mission-focused technology and capabilities in the
areas of intelligence, surveillance and reconnaissance (ISR); cyber
operations and training; and mission-critical IT and analytics. In
addition, more than 75% of their workforce hold high level security
clearances. KeyW's advanced engineering and quick reaction
capability supports the accelerated development of collection
technology, processing, analysis and dissemination of information
across the full spectrum of missions for the Intelligence, Cyber
and Counterterrorism communities. Like Jacobs, KeyW has embedded
and long-standing client relationships that are underpinned by
recurring contracts supporting some of the U.S. government's most
unique and challenging missions.
"Jacobs' global reach and proven track record executing large
complex enterprise contracts provide a powerful platform to unleash
KeyW's complementary rapid technology development," said Jacobs
Chair and CEO Steve Demetriou. "We
are positioned to further accelerate KeyW's success in leveraging
its unique technical solutions and drive value creation for
shareholders and customers alike, including a multi-billion-dollar
space opportunity delivering next generation intelligence and
analytics solutions. Given the compelling fit of Jacobs'
capabilities and contract execution expertise with KeyW's
differentiated, mission driven technology, we are optimistic that
we can drive strong double-digit adjusted EBITDA growth well into
the future."
KeyW President and CEO Bill Weber
said, "This is a winning combination that provides significant,
certain and immediate cash value for KeyW's shareholders as well as
an excellent partner for our clients and employees. Cultural fit
and exceptional shareholder value were of paramount importance in
the criteria for partnership in KeyW's next chapter. Joining with
Jacobs will enable KeyW's talented team to deliver even more
innovative technologies and capabilities to customers."
Strong Strategic Fit: Advancing Jacobs' Profitable Growth
Strategy
- Brings Together World-Class Teams with Shared Values:
Jacobs and KeyW share values centered on innovation, a focus on the
clients' mission, and recruiting and retaining the world's best
talent by being an employer of choice.
- Provides Leadership Position in Intelligence, Surveillance
and Reconnaissance Sector: Through this transaction, Jacobs
will become a technology leader in the high growth ISR sector
projected to reach more than $46
billion by 2024. KeyW's ISR capabilities include rapid
development of highly specialized sensor-based products that KeyW
customizes and deploys to support space, sea, land and air
missions.
KeyW's ISR capabilities also position Jacobs to expand in the
rapidly evolving space-based remote sensing sector. The U.S. Air
Force alone is anticipated to invest more than $14 billion next year into its space programs,
consistent with its prioritization of space as the next critical
domain for enhanced national security.
- Establishes Cyber Capabilities and Expands Client Base:
With the acquisition of KeyW, Jacobs gains access to advanced
offensive and enriched defensive cyber operations and training
capabilities. These capabilities include intelligence analysis,
research and development, classroom and scenario training, software
and hardware engineering and secure mobile communications. With the
combined Jacobs and KeyW portfolio, Jacobs will have one of the
most advanced, integrated full lifecycle cyber security
capabilities supporting the nation's most sophisticated cyber
operations.
- Adds New Mission-Critical IT and Analytics Capabilities:
KeyW brings differentiated capabilities in high-value,
mission-dependent areas of software application development, cloud
infrastructure and analytics that permit collection, transportation
and analysis of data into actionable intelligence.
- Extends Client Base and Portfolio in Mission-Critical,
High-Value Recurring Programs: Jacobs and KeyW have highly
complementary customer bases within Government Services, which will
significantly enhance the Company's presence with key Intelligence
Community clients, expanding its addressable market and exposing
additional high-value programs for capture.
- Synergistic Opportunities Beyond Government Services:
KeyW's advanced remote data collection and analysis capabilities
have broad applicability across Jacobs' diverse business base
yielding synergistic opportunities in intelligent infrastructure,
secure water, environmental remediation and resource
management.
"As information technology and operation technology converge, we
see significant opportunity to leverage KeyW's technology and
innovation across our Buildings, Infrastructure and Advanced
Facilities' client base," Demetriou added. "Upon completion of the
transaction, KeyW will operate within Jacob's ATN business. The
entire Jacobs' leadership team is excited as we bring these two
great companies together as the go-to technical solutions provider,
and all welcome KeyW's talented employees to the Jacobs team."
Compelling Financial Benefits: Delivering on Jacobs'
Acquisition Framework
- Accretive to Adjusted EPS: Jacobs expects
fiscal 2020 adjusted EPS accretion of $0.25 to $0.30 from
KeyW, assuming $15 million in full
run-rate synergies.
- Meaningful Cost Savings: Jacobs expects to realize
approximately $15 million of annual
run-rate cost savings by the end of 2020, with the savings expected
to come primarily from eliminating duplicative public company costs
and real estate.
- Upside from Revenue Synergy Opportunities: Over the next
5 years, Jacobs has identified more than $100 million of potential revenue synergy
opportunities from capturing incremental opportunities within the
federal customer base, both in current contract vehicles and from
opportunities in their respective bid pipelines. The Company also
sees an opportunity to cross-sell KeyW's ISR and cyber capabilities
into Jacobs' Buildings, Infrastructure and Advanced Facilities
business.
- Strong Balance Sheet and Financial Flexibility:
Following the completion of the transaction, Jacobs will maintain
financial strength and flexibility with estimated net pro forma[1]
leverage of less than 1x adjusted EBITDA.
- Capital Return Remains a Priority: Jacobs
expects its $250 million accelerated
share repurchase program previously announced in February to be
completed by June 2019. At that time, the Company will have
$750 million of capacity remaining on
its existing repurchase authorization and will evaluate further
share repurchases.
"The addition of KeyW advances our strategy to accelerate growth
in higher value markets. The transaction aligns with our M&A
criteria and is expected to deliver significant returns for our
shareholders," said Jacobs Chief Financial Officer Kevin Berryman. "We will continue to execute
focused, disciplined and agile capital allocation consistent with
our objective of continuing to deliver superior shareholder
returns."
Transaction Terms and Financing
Under the terms of the agreement, which has been approved by
each company's Board of Directors, Jacobs will commence a tender
offer to acquire all the outstanding shares of KeyW for
$11.25 per share in cash. The per
share price represents a premium of approximately 43% to KeyW's
closing stock price on April 18,
2019, the last trading day prior to today's announcement and
12% premium to the 52-week high. The tender offer is subject to
customary conditions, including regulatory approvals and the valid
tender of a majority of KeyW's outstanding shares of common stock.
Following the successful closing of the tender offer, Jacobs will
acquire any remaining shares of KeyW not tendered in the offer
through a second-step merger at the same price. Jacobs expects to
complete the acquisition by August 31,
2019.
The transaction is not subject to a financing condition. Jacobs
expects to finance the transaction through a combination of cash on
hand and its existing credit facility.
Advisors
Barclays is serving as financial advisor to Jacobs, and Fried,
Frank, Harris, Shriver & Jacobson LLP is serving as legal
counsel to Jacobs. Guggenheim Securities, LLC is serving as
financial advisor to KeyW, and Weil, Gotshal & Manges LLP is
serving as legal counsel to KeyW.
Conference Call
Jacobs will host a conference call today, April 22, 2019, at 8:30 AM
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 by entering the passcode 9058224.
Interested parties can listen to the conference call and view
accompanying slides on the investor page at
http://invest.jacobs.com/ and at https://www.keywcorp.com/.
About Jacobs
Jacobs leads the global professional services sector delivering
solutions for a more connected, sustainable world. With
$15 billion in fiscal 2018 revenue
and a talent force of more than 80,000, Jacobs provides a full
spectrum of services including scientific, technical, professional
and construction- and program-management for business, industrial,
commercial, government and infrastructure sectors. For more
information, visit www.jacobs.com, and connect with Jacobs on
LinkedIn, Twitter, Facebook and Instagram.
About KeyW
KeyW is an innovative national security solutions provider to
the Intelligence, Cyber and Counterterrorism communities. KeyW's
advanced technologies in cyber; intelligence, surveillance and
reconnaissance; and analytics span the full spectrum of customer
missions and enhanced capabilities. The company's highly skilled
workforce solves complex customer challenges such as preventing
cyber threats, transforming data to actionable intelligence, and
building and deploying sensor packages into any domain. For more
information, please visit https://www.keywcorp.com/ and follow KeyW
on Twitter @keywcorp.
Non-GAAP Financial Measures
In this press release, Jacobs has included certain non-GAAP
financial measures as defined in Regulation G promulgated under the
Securities Exchange Act of 1934, as amended. The non-GAAP financial
measures included in this press release (i) KeyW's expected fiscal
2020 adjusted EBITDA, (ii) the expected accretion of the
transaction to Jacobs' adjusted earnings per share (EPS) for fiscal
year 2019 and subsequent years, and (iii) Jacobs' estimated net
debt to adjusted EBITDA ratio after giving effect to the closing of
the transaction and the closing of Jacobs' previously announced
pending divestiture of its Energy, Chemicals and Resources
division. Reconciliation of KeyW's expected fiscal 2020 adjusted
EBITDA, Jacobs' adjusted EPS for fiscal year 2019 and subsequent
years, estimated Jacobs' net debt to adjusted EBITDA ratio
following the transaction to the most directly comparable GAAP
measure is not available without unreasonable efforts because
Jacobs cannot predict with sufficient certainty all the components
required to provide such reconciliation, including with respect to
the costs and charges relating to transaction and integration
expenses, restructuring and integration to be incurred in fiscal
2019 and subsequent periods. Jacobs provides non-GAAP financial
measures to supplement U.S. GAAP measures, as they provide
additional insight into Jacobs' and KeyW's financial results.
However, non-GAAP measures have limitations as analytical tools and
should not be considered in isolation and are not in accordance, or
a substitute for, U.S. GAAP. In addition, other companies may
define non-GAAP measures differently, which limits the ability of
investors to compare non-GAAP measures of Jacobs and KeyW to those
used by peer companies.
Forward-Looking Statements
Certain statements contained in this release 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 based on historical
fact are forward-looking statements, including statements about
whether and when the transaction between Jacobs and KeyW will be
consummated and the anticipated financial and other 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 Jacobs and KeyW may be unable to
obtain regulatory 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 our current plans and operations; the ability
to recognize the benefits of the transaction; the amount of the
costs, fees, expenses and charges related to 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 Agreement and Plan of Merger.
For a description of some additional factors that may occur that
could cause actual results to differ from forward-looking
statements see Jacobs' Annual Report on Form 10-K for the year
ended September 28, 2018, in
particular the "Risk Factors" discussions thereunder as well as our
other filings with the United States Securities and Exchange
Commission ("the SEC"). The company is not 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 You Can Find It
The tender offer referred to in this communication has not yet
commenced. This announcement is for informational purposes only and
is neither an offer to purchase nor a solicitation of an offer to
sell, securities, nor is it a substitute for the tender offer
materials that will be filed with the SEC. The solicitation and
offer to buy the issued and outstanding shares of KeyW common stock
will only be made pursuant to an offer to purchase and related
tender offer materials described more fully below. At the time the
tender offer is commenced, Atom Acquisition Sub, Inc. ("Merger
Sub") will file a tender offer statement with the SEC on
Schedule TO containing an offer to purchase, form of letter of
transmittal and related materials, and KeyW will file with the SEC
a tender offer solicitation/recommendation statement on Schedule
14D-9 with respect to the tender offer. INVESTORS AND STOCKHOLDERS
ARE URGED TO READ THE TENDER OFFER STATEMENT AND RELATED MATERIALS
(INCLUDING THE OFFER TO PURCHASE, RELATED LETTER OF TRANSMITTAL AND
OTHER TENDER OFFER DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION
STATEMENT CAREFULLY (WHEN THEY BECOME AVAILABLE) AND IN THEIR
ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
TENDER OFFER THAT SHOULD BE READ PRIOR TO MAKING A DECISION TO
TENDER SHARES. These materials will be sent free of charge to all
KeyW stockholders. In addition, all of those materials (and all
other tender offer documents filed or furnished by KeyW, Jacobs or
Merger Sub with the SEC) will be available at no charge from the
SEC through its website at www.sec.gov. The Schedule TO (including
the prospectus/offer to purchase and related materials) and the
Schedule 14D-9 (including the solicitation/recommendation
statement), once filed, may also be obtained for free by contacting
the Information Agent for the tender offer which will be named in
the Schedule TO. Copies of the documents filed with the SEC by
Jacobs or Merger Sub will also be available free of charge on
Jacobs' internet website at http://www.jacobs.com.
For additional information, contact:
Jacobs
Investors:
Jonathan Doros, 817-239-3457
jonathan.doros@jacobs.com
Media:
Amy Ochs, 214-912-9171
amy.ochs@jacobs.com
KeyW
Investors:
Mark Zindler, 703.817.4908
investors@keywcorp.com
Media:
Karen Coker,
443.733.1613
communications@keywcorp.com
[1] For Pro forma figure assumes receipt of cash proceeds and
WorleyParsons equity in connection with ECR divesture.
View original content to download
multimedia:http://www.prnewswire.com/news-releases/jacobs-to-acquire-keyw-capturing-leading-position-in-multi-billion-dollar-space-intelligence-market-and-the-high-growth-c5isr-sector-300835451.html
SOURCE Jacobs