MELBOURNE / NEW YORK (Reuters) – US company Jacobs Engineering Group Inc. ( JEC.N ) has agreed to sell its…
MELBOURNE / NEW YORK (Reuters) – US company Jacobs Engineering Group Inc. ( JEC.N ) has agreed to sell its energy, chemical and resource activities to WorleyParsons ( WOR. AX ]) for $ 3.3 billion, in an agreement that will double the size of the Australian engineering service.
The agreement continues a shake of engineering services after Jacob’s acquisition of rich CH2M Hill Cos Ltd last year and $ 2.2 billion ($ 2.9 billion) acquisition of Amec Foster Wheeler by British oil field service John Wood Group.
It comes as WorleyParsons emerges from a three-year decline after the oil crisis and positions it to affect growth in refining and petrochemical sectors, where countries like India build massive new plants.
“Hydrocarbons and minerals and metals both come from the bottom and are well below the peak in 201
3. We think this is an exciting time for the sector,” Andrew Woods CEO Andrew Wood told analysts at a conference call.
Jacobs, the largest supplier of the NASA space program, said it would now focus on higher growth, higher margins, including aviation, technology and nuclear projects, as well as buildings and infrastructure.
The acquisition would make WorleyParsons the world’s largest supplier of professional services in energy and resources said a big footprint in Europe and North America, which complements exposure in the Middle East and Asia.
The transaction will also increase its exposure to refining and petrochemicals, which Wood said was appealing because revenues are less volatile than exploration and production of oil and gas, where WorleyParsons are already leading.  The business would double the company’s 2018 earnings before interest, tax, depreciation (EBITDA) of pro forma to A $ 735 million ($ 523 million) and increase its earnings per share by 50 percent after achieving savings of A $ 130 million, said Wood.
Jacobs said it would receive $ 2.6 billion in cash plus $ 700 million in shares, giving 11 percent of the shares in the expanded WorleyParsons.
“For Jacobs, this transaction marks an inflection point in our portfolio transformation, focusing on more consistent growth with higher margins as a leader to solve the world’s critical challenges,” said Jacobs President and CEO Steve Demetriou in a statement.
The deal has been approved by Both boards are expected to close in the first half of 2019.
WorleyParsons plans to fund the deal through a $ 2.9 billion offer, plus the issue of Jacobs and New Debt.
The issue to Jacobs will be priced at A $ 16, 92 per share. The rest of the offer would be priced at A $ 15.56 per share, a 13 percent discount to WorleyParson’s end of Friday. WorleyParson’s founder and chairman John Grill, the company’s second largest shareholder, will tip A $ 100 million. 19659002] UBS, who advised WorleyParsons on the deal, is chief executive officer with Macquarie Capital on stock sales .
Perella Weinberg Partners LP is financial advisor to Jacobs.
Reporting by Sonali Paul and Jessica Resnick-Ault; Editing Sandra Maler and Richard Pullin
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