(Repeats with no changes to broaden distribution)
By Ransdell Pierson and Liana B. Baker
July 13 Engineering design firm AECOM Technology
Corp on Sunday said it would pay about $4 billion to
acquire engineering and construction services firm URS Corp
AECOM in a news release said it would pay $56.31 a share in
cash and stock for URS. Including the assumption of URS debt,
the total enterprise value of the deal is about $6 billion.
Terms were unanimously approved by both of the
California-based companies, and the acquisition is expected to
close in October. The combined company will have about $19
billion in annual sales and more than 95,000 employees.
URS stockholders will receive $33 in cash and 0.734 share of
AECOM common stock for each URS share. The price represents a
premium of 19 percent over the trailing 30-day average closing
price of URS shares and an 8 percent premium over URS' closing
share price on Friday of $52.02.
AECOM Chief Executive Officer Mike Burke said in an
interview that the deal will strengthen its expertise in the
oil, gas, nuclear and construction sectors. The combined company
will also be able to better compete more effectively on global
projects with rivals in China and Korea.
"While URS is a predominately North American player today,
we can bring that to our global platform spread over 150
countries...," Burke said.
Reuters reported on Friday that URS had held talks with
industry rivals and buyout firms about a potential sale. URS,
which has been under pressure from activist investor Jana
Partners to enhance shareholder value, hired bankers to contact
potential buyers, according to people familiar with the efforts.
Burke said the idea for the deal hatched during a courtesy
visit to URS after he was appointed chief executive in March.
Burke met with URS Chief Executive Officer Martin Koffel.
"While we've been competitors in certain aspects, we quickly
realized that the two of us were much more complementary that we
had originally envisioned," Burke said.
Burke's management team will run the combined company and
Koffel will retire.
URS was also attractive to AECOM because of its U.S.
government contracts. U.S. federal agencies accounted for a
third of its 2013 revenue and government customers include the
U.S. Army and the Department of Energy.
The transaction will create $250 million in annual
cost-saving synergies, nearly all of which will be achieved by
the end of fiscal year 2016, AECOM said. And it will be more
than 25 percent accretive to AECOM's cash earnings per share in
fiscal year 2015, excluding transaction costs, the company said.
AECOM was advised by Bank of America Merrill Lynch
and Moelis & Company, as well as law firm Gibson, Dunn &
Crutcher. URS was advised by Dean Bradley Osborne and Citigroup
Inc while Wachtell, Lipton, Rosen & Katz and Cooley LLP
provided legal counsel.
(Reporting by Ransdell Pierson and Liana B. Baker in New York;
Editing by Cynthia Osterman)