Under the deal, AECOM will acquire all outstanding shares of URS for a combination of cash and stock valued at about $4 billion or $56.31 per URS share, based on the AECOM closing share price as of last Friday. Including the assumption of URS debt, the total enterprise value of the transaction is about $6 billion.
The acquisition will see the two companies combine and integrate their capabilities and expertise to become a mammoth engineering and construction services global provider, with more than 95,000 employees in 150 countries.
“This combination creates an industry leader with the ability to deliver more capabilities from a broad global platform to reach more clients in more industry end markets,” AECOM president and CEO Michael Burke said.
The integration is expected to realise $250 million in annual cost-saving synergies, nearly all of which will be achieved by the end of the 2016 US fiscal year.
Combined, the companies will have calendar year 2013 pro forma revenues of more than $19 billion and earnings before interest, taxes, depreciation and amortisation of about $1.3 billion.
URS chairman and CEO Martin Koffel welcomed the acquisition by AECOM.
“This is a compelling strategic combination that we believe will benefit our clients, stockholders and employees,” he commented.
“URS stockholders will receive significant, immediate value from the transaction and will be able to participate in the future prospects of the combined company, which we expect will be better positioned to compete for major, complex projects across a diverse range of end markets and geographic regions.
“Our two businesses are complementary, and our cultures are highly compatible.
“We anticipate that employees from the combined company will benefit as the organisation integrates its leadership talent and capitalises on its greater scale to invest in its people, improve their career opportunities and advance their capacity to compete globally.”
Following the acquisition, AECOM will become one of the largest companies by revenue in the engineering and construction industry.
The combined firm will be headquartered in Los Angeles and will be the largest publicly traded company in that city. AECOM also expects to maintain a key operational presence in San Francisco, where URS is headquartered.
Burke will be the combined company CEO and AECOM executive chairman John Dionisio will chair the new board of directors. Once the acquisition completed, AECOM will elect two URS board members to the AECOM board.
“We are developing integration plans that will enable us to bring together the best of both organisations,” Burke continued.
“The process will be led by executives of both companies.”
AECOM also announced that it continued to target diluted earnings per share in the lower end of its range of $2.50 to $2.60 for the 2014 US fiscal year, excluding transaction-related costs. It also still anticipates that its third-quarter EPS will be about 25% of its full-year results. AECOM will release its results and host its third-quarter earnings call on August 5.
