- Combination strongly supported by CH2M shareholders with approximately
96 percent affirmative vote.
- Strengthens Jacobs’ diversified and differentiated leadership
position, providing innovative government, infrastructure and
industrial professional services.
- Establishes Jacobs as a global design leader in the industry, offering
greater opportunities for employees as well as enhanced services to
- Reaffirms fiscal 2018 adjusted EPS guidance of $3.55 to $3.95. The
combination is expected to be 15 percent accretive to Jacobs’ adjusted
earnings per share in the first full year after closing1
and 25 percent accretive when further excluding the impact of
amortization from CH2M purchase intangibles.
- Increases Jacobs’ proportion of higher growth, higher margin business
while maintaining its lower-risk portfolio and investment-grade credit
- Announces intention to streamline 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).
- Former CH2M board member Barry Williams joins the Jacobs Board of
DALLAS & DENVER–(BUSINESS WIRE)–Jacobs
Engineering Group Inc. (NYSE:JEC) today announced the completion of
its acquisition of CH2M via a cash and stock transaction. The
combination, which received broad affirmative support from CH2M
shareholders, is expected to further drive the company’s profitable
“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,”
said Jacobs Chairman and CEO Steve Demetriou. “Since our August
announcement, we have held meetings with thousands of CH2M and Jacobs
employees, and I cannot overstate the enthusiasm we share about our
future together. Today, we are celebrating the creation of a new Jacobs
with even greater aspirations to do meaningful work around the world,
heartened by clients who have eagerly anticipated this combination.”
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
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
“We are applying lessons learned from past integration experiences and
adopting best practices for critical factors, such as talent retention,
and building on the excellent cultural foundations of both
organizations,” said Demetriou. “We are well positioned to capitalize on
the differentiated value proposition created by this combination, and
our continued efforts to drive incremental focus and accountability will
be supported by a simplification of our operating model. Most important,
our clients will be able to better realize the benefits of our
industry-leading, innovative capabilities.”
Reaffirms Financial Outlook
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.
- Reaffirms fiscal 2018 outlook: The company reaffirms its
previous fiscal 2018 outlook for both Jacobs as a standalone business
and the expected contribution from CH2M, which translates to fiscal
2018 adjusted EPS of $3.55 to $3.95.2 This guidance
includes a negative impact from the amortization from CH2M purchase
intangibles. The outlook also incorporates standalone revenue growth
ramping during the fiscal year in-line with the company’s previous
expectations. Given the timing of the close, the company does not
expect any material benefit from CH2M in its Q1 results.
- Significant cost savings: Jacobs expects to achieve an
estimated $150 million of annual run-rate savings by the end of the
second year after closing, primarily from real estate, optimized
organizational alignment and systems integrations. Jacobs expects to
incur approximately $225 million in one-time costs to achieve these
ongoing savings. In addition, the company expects to incur other
one-time costs associated with the acquisition, such as change in
control payments, banking and legal fees.
- Earnings accretion: The transaction is expected to be 15
percent accretive to Jacobs’ adjusted earnings per share in the first
full year after closing2 and 25 percent accretive when
further excluding the impact of amortization from CH2M purchase
- Upside for profitable growth: 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
- Sustained financial flexibility: Jacobs is maintaining its
investment-grade credit profile upon closing.
- Attractive risk profile: Jacobs expects that after closing,
approximately 85 percent of combined revenues will be derived from
lower-risk and reimbursable contracts.
Focused and Simplified Operating Model
The company expects to move to reporting results by three global
business lines by the second half of fiscal 2018:
- Aerospace, Technology, Environmental and Nuclear (ATEN):
serving global aerospace, automotive, defense, telecommunications,
nuclear clients and the U.S. intelligence community, led by Terry
- Buildings, Infrastructure and Advanced Facilities (BIAF):
serving broad sectors including buildings, water, transportation
(roads, rail, aviation and ports), and advanced facilities for life
sciences, semiconductors, data centers, consumer products and other
advanced manufacturing operations, led by Bob Pragada.
- Energy, Chemicals and Resources (ECR): serving energy,
chemicals and resources sectors, including upstream, midstream and
downstream oil, gas, refining, chemicals and mining and minerals
industries, led by Vinayak Pai.
Accelerating Opportunities for Profitable Growth in High-margin
- Enhances 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.
is a global leader in the $300 billion-a-year transportation sector,
which includes highways, roads and bridges; rail; aviation; and ports;
growing at 4 to 5 percent on a compounded annual rate. This sector’s
significant investment momentum hinges on population growth and
unprecedented demands for infrastructure development and improvement
in all transportation modes and geographies, particularly in the
United States, Australia, New Zealand, Southeast Asia, the Middle East
and the United Kingdom. The combination is expected to make the
company an employer of choice in the sector, where talent remains in
high demand, forged on a breadth of opportunities advancing the
quality, dependability and sustainability of infrastructure around the
- Bolsters top-tier position in nuclear and environmental services: Nuclear
projects require specialized capabilities that are difficult to
replicate and represent approximately $145 billion in annual
opportunities, growing 2 to 3 percent on a compounded annual basis.
CH2M’s preeminent position in program management of large-scale
environmental and nuclear remediation programs and Jacobs’
complementary experience with government agencies in nuclear
decommissioning together create significant business expansion
Environmental work 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
- Expands leadership in growing industrial sectors: The
combination brings together preeminent engineering expertise and
proven program- and construction-management capabilities, delivering
advanced manufacturing and industrial technologies for diverse
sectors, including consumer products, life sciences, pharmaceuticals,
material sciences and semiconductors.
- Enhances energy, chemicals and resources portfolio: The
transaction combines both firms’ proven engineering and construction
management capabilities to establish a differentiated,
lifecycle-services offering for clients in these sectors. It further
enhances Jacobs’ position, effectively moderating cyclical exposures
with additional operational and maintenance capabilities for upstream,
midstream and downstream clients, including critical infrastructure
for major projects in the oil, gas, refining, chemicals and mining
CH2M Board Member to Join Jacobs’ Board
Jacobs increased the size of its Board of Directors to 11 members and
appointed former CH2M director, Barry Williams, to serve as a director
Williams, who also serves as a director of Navient and several
non-profit organizations, is the retired managing general partner of
Williams Pacific Ventures, Inc. and retired director of the PG&E,
Simpson, and Northwestern Mutual boards. He also previously served as
president and CEO of American Management Association International;
senior mediator for JAMS/Endispute and visiting lecturer for the Haas
Graduate School of Business, University of California; general partner
of WDG, a California limited partnership; and general partner of Oakland
Alameda Coliseum Joint Venture.
For Jacobs: Perella Weinberg Partners LP and Morgan Stanley & Co.
LLC served as financial advisors to Jacobs, while Fried, Frank, Harris,
Shriver & Jacobson LLP and Wachtell, Lipton, Rosen & Katz served as
Jacobs’ legal counsel for the transaction.
For CH2M: BofA Merrill Lynch and Credit Suisse served as
financial advisors to CH2M, while Latham & Watkins LLP and Richards,
Layton & Finger, P.A. served as CH2M’s legal counsel.
Jacobs leads the global professional services sector, delivering
solutions for a more connected, sustainable world. With $15.0 billion in
combined revenue and a talent force more than 74,000 strong, Jacobs
provides a full spectrum of services including scientific, technical,
professional and construction- and program-management for business,
industrial, commercial, government and infrastructure sectors. For more
information, visit www.jacobs.com,
and connect with Jacobs on LinkedIn, Twitter and Facebook.
Certain statements contained in this document constitute forward-looking
statements as such term is defined in Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended, and such statements are intended to be covered by the
safe harbor provided by the same. Statements made in this press release
that are not based on historical fact are forward-looking statements,
including the anticipated benefits of the acquisition of CH2M and
expectations for future performance and earnings, including the
company’s fiscal 2018 outlook. Although such statements are based on
management’s current estimates and expectations, and currently available
competitive, financial, and economic data, forward-looking statements
are inherently uncertain, and you should not place undue reliance on
such statements as actual results may differ materially. We caution the
reader that there are a variety of risks, uncertainties and other
factors that could cause actual results to differ materially from what
is contained, projected or implied by our forward-looking statements.
For a description of some additional factors that may occur that could
cause actual results to differ from our forward-looking statements see
Jacobs’ Annual Report on Form 10-K for the period ended September 29,
2017. Jacobs is under no duty to update any of the forward-looking
statements after the date of this press release to conform to actual
results, except as required by applicable law.
1 Adjusted earnings per share exclude transaction and
2 Adjusted earnings per share exclude
transaction and integration costs.
3 All business line
opportunity figures: Internal assessment and third-party research.
Jacobs Engineering Group Inc.
Paul Crum, 303-525-2916
Engineering Group Inc.
Salim Rahimi, 214-583-8428