AECOM confirmed it would pay USD56.31 a share in cash and stock for URS. Including the assumption of URS debt, the total enterprise value of the deal is about USD6 billion. URS stockholders will receive USD33 in cash and 0.734 share of AECOM common stock for each URS share. The price represents a premium of 19% over the trailing 30-day average closing price of URS shares and an 8% premium over URS’ closing share price on Friday of USD52.02.
“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,” said AECOM Chief Executive Officer Mike Burke in an interview. “While URS is a predominately North American player today, we can bring that to our global platform spread over 150 countries”.
URS was also attractive to AECOM because of its US government contracts. US federal agencies accounted for a third of its 2013 revenue and government customers include the US Army and the Department of Energy.
URS, which has been under pressure from activist investor Jana Partners to enhance shareholder value, hired bankers to contact potential buyers. During a courtesy visit to URS Burke met with URS Chief Executive Officer Martin Koffel. “While we’ve been competitors in certain aspects, we quickly realised 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.