Jacobs to Acquire CH2M for $3.3 billion
US contractor Jacobs Engineering has entered into a definitive agreement to buy CH2M in a cash and stock transaction with an enterprise value of about $3.27 billion, including roughly $416 million of debt.
Based in Denver, Colorado, USA, CH2M is a design, engineering and program management firm with 20,000 employees and revenues of about $4.4 billion in the past 12 months.
The acquisition enhances Jacobs’ position in the petroleum and chemicals industry by providing additional operational and maintenance capabilities for both upstream and midstream clients and enabling infrastructure for major petroleum and chemicals projects.
Jacobs expects to achieve $150 million of annual run-rate cost savings by the end of the second year after the transaction closes, incurring one-time costs of about $225 million as a result. Savings are expected to come from real estate, optimization of corporate operations, alignment of organizational structures, procurement and IT systems.
To fund the $2.4 billion cash required, Jacobs will use a combination of cash on hand, borrowings under an existing revolving credit facility and $1.2 billion of new committed three-year term debt.
The merger is subject to regulatory clearance and approval by CH2M shareholders but is expected to close in Jacob’s fiscal 2018 first quarter. At completion, the Jacobs board will be expanded to include an additional director from CH2M.
Private equity firm Apollo Global Management, which has a voting interest of about 18% in CH2M, has already agreed to vote in favour of the deal.