Michael S. Burke, President and CEO, AECOM
This week, engineering design firm AECOM Technology Corp (AECOM) announced that it would pay around $4 billion in cash and stock to purchase engineering and construction services company URS Corp. The acquisition will result in a combined company of more than 95,000 employees and around $19 billion in annual sales. Both companies have unanimously approved the deal, which expected to close in October.
In a news release, AECOM disclosed that it would pay $56.31 per share in cash and stock for URS. For URS stockholders, the deal means they will receive $33 in cash and 0.734 share of AECOM common stock for each of their URS shares. URS’s closing share price before the acquisition was $52.02, so the new price represents a premium of 19 percent.
The acquisition is expected to result in a $250 million annual cost-saving synergy by the end of fiscal year 2016, according to AECOM. Additionally, AECOM’s cash earnings per share will grow by more than 25 percent, through accretion, in fiscal year 2015, excluding transaction costs.
AECOM says the deal will make it one of the largest companies (by revenue) in the engineering and construction industry. The Los Angeles-based company will also be the largest publicly traded company headquartered in the city. URS is based in San Francisco, so AECOM will enjoy a significant operations presence there as well.
U.S. federal agencies represented a third of URS’s 2013 revenue. URS provides technical, engineering and construction services to customers, including the U.S. Army and the Department of Energy.
