Jacobs Engineering Group Inc. has announced the completion of its acquisition of CH2M via a cash and stock transaction. The combination, which had strong support from CH2M shareholders, is expected to further drive the company’s profitable growth strategy.

The Group said it would increase Jacobs’ proportion of higher growth, higher margin business while maintaining its lower-risk portfolio and investment-grade credit profile.

Jacobs Chairman and CEO Steve Demetriou commented:

“This is a transformative step-change that brings together the industry’s foremost expertise and services to fulfill our vision to provide leading-edge solutions for a more connected, sustainable world,”

Demetriou stressed the combined firm’s continuing emphasis on talent retention and hiring as a top priority. “People are the heart of our organization, and we are calling on the best and brightest to join the new Jacobs to drive our growth strategy and be part of our exciting future.”

Focused integration discipline

Jacobs formed an Integration Management Office (IMO) early in August to begin integration planning following the announcement of the proposed CH2M acquisition. The IMO identified rigorous processes and protocols to drive realization of cost and growth synergies, for which Jacobs’ executive team and Board of Directors will continue to provide active oversight.

Both organizations reported strong performance in 2017, bolstering confidence in prospects for enhanced value creation in the newly combined firm and reinforcing the expectations for integration synergies and returns on the transaction.

According to Jacobs, the broader, combined solutions offering of the combined company, including CH2M’s proven leadership in program management and construction management, presents potential for longer-term revenue upside extending both companies’ complementary offerings across their combined client base and broader global footprint.

Focused and simplified operating model

Jacobs also announced its intention to streamline its operating model into three global lines of business, including: Aerospace, Technology, Environmental and Nuclear (ATEN); Buildings, Infrastructure and Advanced Facilities (BIAF); and Energy, Chemicals and Resources (ECR).

The company expects to move to reporting results by the three global business lines by the second half of fiscal 2018:

Water represents an approximately $100 billion-a-year opportunity

Jacobs said the acquisition enhances its position in infrastructure, including water and transportation. Water represents an approximately $100 billion-a-year opportunity, expected to grow at a 4 to 5 percent compounded annual rate, presenting significant potential to extend CH2M’s leadership in design, management and lifecycle services for government and industrial clients, including operations and maintenance, and resiliency services mitigating climate threats.

Jacobs is expected to benefit by expanding these capabilities globally, backed by its strong operating and project delivery platform. The combined company will have a leading global water business with the scale, critical mass and experience to capitalize on infrastructure and industrial growth trends.

Environmental work separately represents an approximately $160 billion annual opportunity, growing 4 to 5 percent on a compounded annual rate. The combined company will have among the broadest and deepest environmental technical and project delivery capabilities in the industry.

 In addition, CH2M’s environmental expertise complements Jacobs’ existing business with the U.S. federal government, positioning the combined company with leading capabilities for government clients that also are transferable to private-sector clients, creating opportunities for substantial upside potential for the company.