Jacobs Engineering Group Inc. and CH2M HILL have today announced that they have entered into a definitive agreement under which Jacobs will acquire all of the outstanding shares of CH2M.
The deal is a cash and stock transaction with an enterprise value of approximately $3.27 billion, including approximately $416 million of CH2M net debt.
The deal will further strengthen Jacobs’ leading position in infrastructure, with the water sector flagged up as a major global growth opportunity.
Water represents $100 billion opportunity
Water represents an approximate $100 billion opportunity, growing 4% to 5% on a compounded annual rate. Jacobs said that 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.
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 the growing sector and expanding Jacobs’ scope of work.
Environmental work is separately highlighted as 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.
The leading environmental capability, from planning and permitting to remediation, is also seen as transferable across Jacobs’ private sector client base, creating the opportunity for substantial upside potential for the combined company.
With twelve month revenues of $4.4 billion 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.
Combined company set to deliver more solutions to more clients in both government and private sector.
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. The 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.
Steve Demetriou, Jacobs’ Chairman and CEO commented:
“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.
“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.”
Jacobs currently employs over 54,000 people and operates in more than 25 countries around the world.
The transaction is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by CH2M stockholders. Apollo Global Management, LLC, which has an approximate 18% voting interest in CH2M, has agreed to vote in favour of the transaction.