DALLAS, Aug. 20, 2019 /PRNewswire/ -- Jacobs (NYSE: JEC)
announced today it has entered into an agreement to acquire John
Wood Group's Nuclear business for an enterprise value of £250
million (approx. $300 million) on a
debt-free, cash-free basis. The transaction represents an
enterprise value-to-expected pro forma calendar year (CY) 2019
adjusted EBITDA multiple of 7.9x, assuming £10 million
($12 million) of full run-rate cost
synergies from the combined organizations. Jacobs expects to close
the acquisition by its fiscal 2020 second quarter.
"This acquisition further strengthens Jacobs' position in highly
profitable and complementary sectors within nuclear and defense,
enhancing our recognized program management skills with deep,
technical expertise," said Jacobs Chair and CEO Steve Demetriou. "We are excited to welcome
these talented employees to the Jacobs' team. Given the compelling
and synergistic fit of our two organizations, we believe this
transaction will translate into significant value for Jacobs'
shareholders, diverse opportunities for our employees and new,
differentiated nuclear and defense solutions for our clients."
Strong Strategic Fit with Jacobs Aerospace, Technology &
Nuclear (ATN) Line of Business
- Accelerates ATN profitable growth: Wood Nuclear provides
solutions that span the entire life cycle of the nuclear industry
and provides program management technical and consulting services
in areas such as decommissioning, nuclear new build and operational
support in the civil nuclear and defense segments. The business has
approximately $285 million of
expected CY19 revenue and more than 2,000 employees. Combining this
team into Jacob's existing ATN business provides an important
platform for growth in nuclear and defense across the U.K. and an
increased access to Europe and
Asia.
- Enhances Jacobs' credentials as a Tier-1 global nuclear
services provider and expands technical capabilities in defense,
environmental restoration and clean energy: This acquisition
brings deep technical expertise with unique engineering and
scientific skills and a portfolio supporting major national
programs in nuclear defense systems, new build and operations and
decommissioning. The transaction enhances Jacobs' capabilities and
margin profile of its existing $1.2
billion nuclear portfolio and supports its sustainability
agenda managing technically complex projects in cleaner energy,
nuclear clean-up and environmental remediation.
- Strengthens Jacobs' position in higher-margin,
technology-enabled solutions: Jacobs' global reach and proven
track record executing large complex enterprise contracts provide a
powerful platform to accelerate this acquisition's complementary
technology development. In addition, it owns and operates the
U.K.'s largest independent nuclear research and testing facilities,
including remote handling and inspection technology capabilities
and test rig facilities.
Compelling Financial Benefits: Delivering on Jacobs'
Acquisition Framework
"This acquisition is expected to deliver returns for our
shareholders in excess of our cost of capital," said Jacobs Chief
Financial Officer Kevin Berryman.
"We will continue to execute a focused, disciplined and agile
capital allocation strategy that is consistent with our objective
of compounding above market returns for our shareholders."
- Accretive to adjusted EPS: Jacobs expects adjusted EPS
accretion in the range of $0.10 to
$0.12 from the acquisition of Wood
Nuclear in the first year of ownership. Beyond year one, accretion
will build as the full run-rate of synergies of approximately
$12 million are realized and organic
growth occurs.
- Adds higher-margin solutions: Pro forma for the
acquisition, estimated Wood Nuclear adjusted EBITDA margin
contribution will be 10%+, including the full run-rate benefit of
cost synergies from the combined organizations.
- Revenue synergy opportunities: Potential to capture
meaningful revenue synergies as a leading global Tier-1 nuclear
services provider by bringing together our outstanding program
management capabilities and Wood Nuclear's technical
capabilities.
- Strong balance sheet and financial flexibility: Pro
forma for the acquisition, Jacobs will maintain financial strength
and flexibility with an estimated net debt to pro forma adjusted
EBITDA of slightly under 1.0x.
Transaction Terms and Financing
The transaction, which is expected to close by Jacobs' fiscal
2020 second quarter, is subject to the satisfaction of customary
closing conditions, including regulatory approvals. Jacobs has
agreed to pay a fee of approximately $9
million to John Wood Group in certain circumstances where
the transaction is not cleared by the U.K. Competition and Markets
Authority.
The agreement has been approved by each company's Board of
Directors, is not subject to a financing condition, and does not
require John Wood Group's shareholder approval. Jacobs expects to
finance the transaction through cash on hand and existing credit
facilities.
Advisors
Rothschild & Co is serving as sole financial advisor to
Jacobs, and Paul Hastings LLP is serving as legal counsel to
Jacobs. Price Waterhouse Coopers is serving as financial advisor to
John Wood Group, and Slaughter and May is serving as legal counsel
to John Wood Group.
Conference Call
Jacobs will host a conference call today, August 20, 2019, at 10:00
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 by entering the passcode 5477848.
Interested parties can listen to the conference call and view
accompanying slides on the investor page here.
About Jacobs
Jacobs leads the global professional services sector delivering
solutions for a more connected, sustainable world. With
approximately $12 billion revenue and
a talent force of more than 50,000, 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.
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 are: (i) Wood Nuclear
expected 2019 adjusted EBITDA, (ii) the expected accretion of the
transaction to Jacobs' adjusted earnings per share (EPS) for the 12
months following the closing and subsequent years; (iii) expected
adjusted EBITDA margin contribution of Wood Nuclear; and (iv)
estimated net debt to pro forma adjusted EBITDA of Jacobs after
giving effect to the transaction. Reconciliation of these financial
measures 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, fiscal
2020 and subsequent periods. Jacobs provides non-GAAP financial
measures to supplement U.S. GAAP measures, as they provide
additional insight into Jacobs' and Wood Nuclear 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 Wood Nuclear
to those used by peer companies.
Forward-Looking Statements
Statements made in this release that are not based on historical
fact, including but not limited to the fiscal 2019 outlook, Wood
Nuclear expected 2019 adjusted EBITDA and revenue, expected
accretion of the transaction to Jacobs' adjusted EPS for the 12
months following closing and subsequent years, timing and expected
completion of the transaction, the anticipated benefits of the
transaction, including expected EPS and margin enhancements and
cost and revenue synergies, among others, are forward-looking
statements. We base these forward-looking statements on
management's current estimates and expectations as well as
currently available competitive, financial and economic data.
Forward-looking statements, however, are inherently uncertain.
There are a variety of factors that could cause business results to
differ materially from our forward-looking statements. The
potential risks and uncertainties include, among others, the
possibility that Jacobs and John Wood Group 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 share purchase agreement. For a
description of some additional factors which may occur that could
cause actual results to differ from our forward-looking statements
please refer to our Form 10-K for the fiscal year ended
September 28, 2018, and in particular
the discussions contained under Items 1 - Business, 1A - Risk
Factors, 3 - Legal Proceedings, and 7 - Management's Discussion and
Analysis of Financial Condition and Results of Operations, and our
Quarterly Reports on Form 10-Q for the quarters ended December 28, 2018, March
29, 2019 and June 28, 2019,
and in particular the discussions contained under Part I, Item 2 -
Management's Discussion and Analysis of Financial Condition and
Results of Operations; Part II, Item 1 - Legal Proceedings; and
Part II, Item 1A - Risk Factors, as well as the company's other
filings with the Securities and Exchange Commission. We do not
undertake to update any forward-looking statements made herein.
For additional information, contact:
Investors:
Jonathan Doros, 817-239-3457
jonathan.doros@jacobs.com
Media:
Amy Ochs, 214-912-9171
amy.ochs@jacobs.com
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SOURCE Jacobs