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· 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 our clients.
· 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 profile.
· 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 Directors.
DALLAS & DENVER - 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 growth strategy.
"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 future."
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 oversight.
"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.
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:
Accelerating Opportunities for Profitable Growth in High-margin Industries3
Jacobs already 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 world.
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 the company.
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 of Jacobs.
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.