USA: Business Strategy Jacobs Sells Energy, Chemicals and Resources Business to Worley Parsons for 3.3 Billion Dollars
The company has undertaken this move to focus on its two higher growth businesses – Aerospace, Technology, Environmental & Nuclear; and Buildings, Infrastructure & Advanced Facilities.
Texas/USA – Jacobs Engineering Group has recently announced that it has entered into a definitive agreement to sell its Energy, Chemicals and Resources (ECR) segment to Worley Parsons for 3.3 billion dollars, consisting of 2.6 billion dollars in cash and 700 million dollars in Worley Parsons ordinary shares. The transaction value represents a multiple of more than 11.5 times trailing twelve-month (TTM) adjusted Ebitda for the ECR business.
Following the completion of the transaction, Jacobs will be focused solely on its two higher growth, higher margin lines of business – Aerospace, Technology, Environmental & Nuclear (Aten) and Buildings, Infrastructure & Advanced Facilities (BIAF).
The company will report results for fiscal 2018 on November 20.
Use of Proceeds
Upon closing, Jacobs expects to receive approximately 2.6 billion dollars in net proceeds from the transaction, which initially will be used to pay down floating-rate debt, while also maintaining a disciplined approach to deploy capital for increased shareholder value, including mergers and acquisitions. The company will provide further details about its capital allocation strategy, as well as its updated pro forma financial outlook, at the company's investor day on February 19, 2019.
Worley Parsons Equity
Together, ECR and Worley Parsons will be a global leader with the talent, industry sector, customer and geographic diversity needed to compete and win. The structure of the transaction enables Jacobs to benefit from the near-term upside created by the combination and the oil and gas market recovery.
At the close of the transaction, Jacobs will receive approximately 58.2 million shares of Worley Parsons stock, which will equate to approximately 11 percent of Worley Parsons ordinary shares based on Worley Parsons' outstanding shares post-close. The shares will be subject to a six-month holding requirement (but not earlier than August 31) following the transaction's closing.
Approvals and Time to Close
The Jacobs Board of Directors and the Worley Parsons Board of Directors each have approved the transaction. The transaction is expected to close in the first half of calendar year 2019, subject to customary closing conditions and regulatory approvals.