(Adds background on Jana position, share price)
By Soyoung Kim and Mike Stone
NEW YORK, July 11 URS Corp, an
engineering and construction services company with a market
value of $3.5 billion, has held talks recently with industry
rivals and buyout firms about a potential sale, people familiar
with the matter said.
URS, which has been under pressure from activist investor
Jana Partners to enhance shareholder value, has hired Citigroup
Inc and DBO Partners to contact potential buyers and gauge
their interest in the past few months, the people said on
It could not be learned if any of the recent discussions
have led to offers or will result in a transaction. Some private
equity firms that were approached have passed on a deal,
according to the people, who asked not to be named because the
matter is not public.
Shares of URS were up nearly 6 percent at $53.84 on the New
York Stock Exchange on the news, boosting the company's market
capitalization to more than $3.5 billion.
Representatives of URS, Citigroup and DBO Partners could not
be immediately reached for comment.
In February, Barry Rosenstein's Jana Partners disclosed a
stake of more than 9 percent in URS, a San Francisco-based
provider of engineering, construction and technical services for
federal agencies and companies.
The company later made a deal with Jana to add the
investor's nominees to its board and also establish a "value
creation committee" to evaluate options for increasing its stock
Under the agreement, Jana will also have a say in the
selection of URS's new CEO, who will succeed current chief
Martin Koffel by the end of 2014.
URS is a major contractor to the U.S. federal government,
which accounted for a third of its 2013 revenue. Among its
government customers are the U.S. Army and the Department of
Some of its large competitors include Fluor Corp,
Jacobs Engineering Group, AECOM Technology Corp,
Tetra Tech Inc and Chicago Bridge & Iron Company
The services these companies provide do not require large
upfront capital expenditures and therefore present limited
barriers against new competitors. The industry has also been
affected by federal budget cuts in recent years.
Activist investors such as Jana buy shares in companies
they perceive as undervalued and advocate for change, such as a
sale or breakup.
Jana is pressuring another company, PetSmart Inc, to
explore a sale after reporting a 9.9 percent stake in the pet
products retailer earlier this month.
(Editing by Matthew Lewis)