Jacobs Engineering Group Inc. (Dallas, Tex.; www.jacobs.com) has entered into a definitive agreement to sell its Energy, Chemicals and Resources (ECR) segment to WorleyParsons Ltd- for $3.3 billion, consisting of $2.6 billion in cash and $700 million in WorleyParsons 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).
“For Jacobs, this transaction marks an inflection point in our portfolio transformation focused on more consistent, higher-margin growth as a leader solving the world’s critical challenges,” says Jacobs chairman and CEO Steve Demetriou. “The increased financial flexibility we gain from this sale better positions us to invest in our ATEN and BIAF businesses, focusing our premier talent and expertise on technology, innovation and sustainable solutions that are priorities for our infrastructure and government services clients. These capabilities, along with our strong backlog and efficient global platform, will further strengthen our global leadership in these segments to drive meaningful value creation.”
“While we are in the process of finalizing our fiscal 2018 results, our current view is materially consistent with previously announced guidance for the year,” says Jacobs CFO Kevin Berryman. “In addition, we continue to believe that the adjusted EPS guidance provided for fiscal 2019 remains appropriate, keeping in mind that such guidance did not reflect any impact from the pending transaction announced today.”
“Upon closing of this transaction, we plan to initially apply proceeds to pay down floating-rate debt,” Berryman adds. “Beyond that, our strong financial flexibility and free cash flow will support incremental profitable growth investments and capital returns to shareholders, consistent with our record of disciplined allocation yielding attractive growth and value creation. And of course, Jacobs will continue to benefit from our ECR business’ earnings and cash flow through the closing of the transaction.”