US engineering firm Jacobs has bought rival CH2M in a deal for £2.15bn ($2.85bn).
The mega merger, which will see Jacobs grow by an estimated 20,000 to 74,000 staff, will make Jacobs one of the world’s largest engineering consultants.
In the deal Jacobs will acquire all of the CH2M’s outstanding shares in a 60% cash and 40% stock transaction. The overall deal has an enterprise value - the measurement of CH2M’s total value - of around £2.47M ($3.27bn), which includes approximately £315M ($416M) of CH2M net debt.
“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,” said Jacobs chairman and chief executive Steve Demetriou.
“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.”
The Times recently reported speculation of the takeover, reporting a source who said that the move by Jacobs is in part driven by a desire to make headway into the UK market. Jacobs said a driver for the takeover was CH2M’s strength in the water and transportation sector.
The company is now setting its sights on strengthening its position in these sectors, saying that the water business alone represented a $100bn opportunity.
It is also aiming to achieve “significant growth” in the government services sector, by establishing itself as a tier 1 provider to the global nuclear industry.
An integration management office (IMO) has been set up to oversee the merger. This will be jointly led by former president of Jacobs petroleum and Chemicals Gary Mandel, who now takes on the role of executive vice president of integration for Jacobs, and CH2M executive vice president for growth and sales Lisa Glatch.
Jacobs’ board will be expanded to include an additional director from CH2M.