-
Creates industry-leading E&C company with broad global reach and
enhanced ability to deliver integrated services to clients
-
Accelerates AECOM’s strategy of offering an integrated-delivery
model by adding key capabilities and expertise in markets including
construction, oil & gas, power and government services
-
Expected to realize US$250 million in annual cost-saving synergies,
nearly all of which will be achieved by the end of fiscal year 2016
-
Expected to be accretive to AECOM’s GAAP earnings per share and
more than 25% accretive to AECOM’s cash earnings per share in FY2015,
excluding transaction-related costs
-
Transaction enterprise value of approximately US$6 billion
LOS ANGELES & SAN FRANCISCO--(BUSINESS WIRE)--Jul. 13, 2014--
AECOM Technology Corporation (NYSE:ACM) and URS Corporation (NYSE:URS)
today announced the execution of a definitive agreement under which
AECOM will acquire all outstanding shares of URS for a combination of
cash and stock valued at approximately US$4 billion or US$56.31 per URS
share, based on the AECOM closing share price as of July 11, 2014.
Including the assumption of URS debt, the total enterprise value of the
transaction is approximately US$6 billion.
The combined company will be a leading, fully integrated infrastructure
and federal services provider with more than 95,000 employees in 150
countries. It would have calendar year 2013 pro forma revenues of more
than US$19 billion and EBITDA of approximately US$1.3 billion.(1)
“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,” said Michael S. Burke, AECOM president and
chief executive officer. “Clients, employees and stockholders of both
companies will benefit from the opportunities created by these expanded
capabilities, broad global reach in key growth markets and economies of
scale. In one step, we will dramatically accelerate our strategy of
creating an integrated delivery platform with superior capabilities to
design, build, finance and operate infrastructure assets around the
world.”
Martin M. Koffel, chairman and chief executive officer of URS, stated,
“This is a compelling strategic combination that we believe will benefit
our clients, stockholders and employees. 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.”
Koffel continued, “Our two businesses are complementary, and our
cultures are highly compatible. We anticipate that employees from the
combined company will benefit as the organization integrates its
leadership talent and capitalizes on its greater scale to invest in its
people, improve their career opportunities and advance their capacity to
compete globally.”
Terms of the Transaction
AECOM will pay US$56.31 per URS share, based on AECOM’s closing price on
July 11, 2014, representing a premium of 19% over the trailing 30-day
average closing price of URS shares ending July 11, 2014. URS
stockholders will receive per share consideration equal to US$33.00 in
cash and 0.734 shares of AECOM common stock for each URS share. URS
stockholders may elect to receive all cash or all stock consideration,
subject to proration in the event of oversubscription. The election will
be subject to a customary proration mechanism to achieve an aggregate
consideration mix of approximately 59% cash and 41% AECOM common shares.
The stock portion of the consideration is expected to be tax-free to URS
stockholders.
AECOM stockholders will retain their shares following the consummation
of the transaction. Upon completion of the transaction, URS stockholders
will own shares that account for approximately 35% of the combined
company, which will allow URS stockholders to participate in the
prospects of a business that is well positioned to create long-term
stockholder value.
AECOM expects the combination to be accretive to its GAAP earnings per
share and more than 25% accretive to its cash earnings per share in
fiscal year 2015, excluding transaction-related costs. AECOM also
expects annual cost synergies of US$250 million, nearly all of which it
expects to achieve by the end of fiscal year 2016. These synergy
expectations are based on the due diligence and planning that have
already been conducted. Including the realization of expected synergies,
the approximately US$6 billion enterprise value of the transaction is
less than 7x pro forma 2015 URS EBITDA.
AECOM has received a firm commitment from Bank of America to provide
debt financing in connection with the transaction, subject to customary
conditions, the proceeds of which will be used to refinance a portion of
existing AECOM and URS debt and to finance the cash consideration to be
paid in the transaction. Closing of the transaction is not conditioned
on financing. The financing commitment comprises senior secured credit
facilities. At closing, AECOM is expected to have approximately US$5.2
billion in total debt outstanding.
“We will continue to maintain our balance sheet flexibility,” said
Stephen M. Kadenacy, chief financial officer. “We plan to use our strong
free cash flow to reduce our debt level, with a goal of returning to our
long-term target leverage ratio of approximately 2 times debt-to-EBITDA
by the end of 2017.”
The terms of the definitive agreement have been unanimously approved by
the Boards of Directors of both companies. The transaction is subject to
customary closing conditions, including regulatory approvals, approval
by URS stockholders of the merger agreement, and the approval by AECOM
stockholders of the issuance of shares in the transaction. The
transaction is expected to close in October 2014.
Seamless Integration Anticipated
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.
Michael S. Burke will be the combined company’s chief executive officer,
and the companies have designed a new operating management structure
that will include proven senior leaders from both URS and AECOM. John M.
Dionisio, AECOM executive chairman, will be chairman of the board and,
at closing, AECOM will elect two URS board members to the AECOM Board of
Directors.
“Building on AECOM’s experience of adding new skill sets and delivering
them across our established global platform, we anticipate a smooth and
seamless integration,” said Burke. “We are developing integration plans
that will enable us to bring together the best of both organizations.
The process will be led by executives of both companies.”
Additional Capabilities to Serve Customers
Across AECOM’s Global Platform
The combined company will be a premier, fully integrated infrastructure
firm, serving clients across a broad range of markets, including
transportation, facilities, environmental, energy, water and government.
The two companies are world leaders in the infrastructure industry.
URS adds to AECOM’s construction capabilities, deepening a core
competency that AECOM expects to leverage across its global platform.
URS also brings strong sector expertise in important end markets,
including oil & gas, power and government services.
Burke added, “The combination of AECOM and URS creates an industry
leader with unsurpassed capacity to deliver integrated solutions across
AECOM’s existing markets. We will have the ability to design and deliver
major civil infrastructure projects in sectors such as transportation
and water. In addition, we expect to seize opportunities to more broadly
leverage our direct investment vehicle, AECOM Capital.”
AECOM Outlook
AECOM also announced that it continues to target diluted earnings per
share (EPS) in the lower end of its range of US$2.50 to US$2.60 for
fiscal year 2014, excluding transaction-related costs. It also still
anticipates that its third-quarter EPS will be approximately 25% of its
full-year results. The company’s backlog continues to grow sequentially
and year over year, and remains at record levels. AECOM will release its
results and host its third-quarter earnings call on August 5, 2014.
Investor Call
AECOM and URS will host a joint conference call on Monday, July 14,
2014, at 8 a.m. EDT to discuss the business combination. Interested
parties can listen to the conference call and view accompanying slides
via webcast at www.aecom.com
and www.urs.com.
The webcast will be available for replay following the call. The call
can also be accessed over the phone by dialing 1 (800) 708-4540 or 1
(847) 619-6397; the conference ID is 37659204.
Additional information about this transaction is available online at www.aecom-urs.com.
BofA Merrill Lynch acted as lead financial advisor to AECOM with Moelis
& Company LLC also acting as financial advisor. Gibson, Dunn & Crutcher
LLP served as AECOM’s legal counsel. Dean Bradley Osborne and Citi
Corporate and Investment Banking acted as financial advisor to URS, and
Wachtell, Lipton, Rosen & Katz and Cooley LLP served as its legal
counsel.
(1) A reconciliation of EBITDA to GAAP net income is included
later in this press release.
About AECOM
Ranked as a leading engineering design firm by Engineering News-Record
magazine, AECOM is a premier, fully integrated infrastructure and
support services firm, with a broad range of markets, including
transportation, facilities, environmental, energy, water and government.
With approximately 45,000 employees — including architects, engineers,
designers, planners, scientists and management and construction services
professionals — serving clients in more than 150 countries around the
world, AECOM is a leader in all of the key markets that it serves.
AECOM provides a blend of global reach, local knowledge, innovation and
technical excellence in delivering solutions that create, enhance and
sustain the world's built, natural, and social environments. A Fortune
500 company, AECOM had revenue of $8.0 billion during the 12 months
ended March 31, 2014. More information on AECOM and its services can be
found at www.aecom.com.
About URS
URS Corporation (NYSE: URS) is a leading provider of engineering,
construction, and technical services for public agencies and private
sector companies around the world. The company offers a full range of
program management; planning, design and engineering; systems
engineering and technical assistance; construction and construction
management; operations and maintenance; management and operations;
information technology; and decommissioning and closure services. URS
provides services for federal, oil and gas, infrastructure, power, and
industrial projects and programs. Headquartered in San Francisco, URS
Corporation has more than 50,000 employees in a network of offices in
nearly 50 countries (www.urs.com).
Forward-Looking Statements: All statements in this press release
other than statements of historical fact are "forward-looking
statements" for purposes of federal and state securities laws. These
forward-looking statements, which are based on current expectations,
estimates and projections about the industry and markets in which AECOM
and URS operate and beliefs of and assumptions made by AECOM management
and URS management, involve uncertainties that could significantly
affect the financial results of AECOM or URS or the combined company.
Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,”
“seeks,” “estimates,” variations of such words and similar expressions
are intended to identify such forward-looking statements. Such
forward-looking statements include, but are not limited to, statements
about the benefits of the transaction involving AECOM and URS, including
future financial and operating results, the combined company’s plans,
objectives, expectations and intentions. All statements that address
operating performance, events or developments that we expect or
anticipate will occur in the future – including statements relating to
creating value for stockholders, benefits of the transaction to
customers and employees of the combined company, integrating our
companies, cost savings, synergies, earnings per share, backlog, and the
expected timetable for completing the proposed transaction – are
forward-looking statements. These statements are not guarantees of
future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict. Although we believe the
expectations reflected in any forward-looking statements are based on
reasonable assumptions, we can give no assurance that our expectations
will be attained and therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in such forward-looking
statements. For example, these forward-looking statements could be
affected by factors including, without limitation, risks associated with
the ability to consummate the merger and the timing of the closing of
the merger; the failure to obtain the necessary debt financing
arrangements set forth in the commitment letter received in connection
with the merger; the interest rate on any borrowings incurred in
connection with the transaction; the impact of the indebtedness incurred
to finance the transaction; the ability to successfully integrate our
operations and employees; the ability to realize anticipated benefits
and synergies of the transaction; the potential impact of announcement
of the transaction or consummation of the transaction on relationships,
including with employees, customers and competitors; the outcome of any
legal proceedings that have been or may be instituted against URS and/or
AECOM and others following announcement of the transaction; the ability
to retain key personnel; the amount of the costs, fees, expenses and
charges related to the merger and the actual terms of the financings
that will be obtained for the merger; changes in financial markets,
interest rates and foreign currency exchange rates; and those additional
risks and factors discussed in reports filed with the Securities and
Exchange Commission (“SEC”) by AECOM and URS. AECOM and URS do
not intend, and undertake no obligation, to update any forward-looking
statement.
Additional Information about the Proposed Transaction and Where to
Find It
In connection with the proposed transaction, AECOM intends to file with
the SEC a registration statement on Form S-4 that will include a joint
proxy statement of AECOM and URS that also constitutes a prospectus of
AECOM. Investors and security holders are urged to read the joint proxy
statement/prospectus and other relevant documents filed with the SEC,
when they become available, because they will contain important
information about the proposed transaction.
Investors and security holders may obtain free copies of these
documents, when they become available, and other documents filed with
the SEC at www.sec.gov.
In addition, investors and security holders may obtain free copies of
the documents filed with the SEC by AECOM by contacting AECOM Investor
Relations at 1-213-593-8000. Investors and security holders may obtain
free copies of the documents filed with the SEC by URS by contacting URS
Investor Relations at 877-877-8970. Additionally, information about the
transaction is available online at www.aecom-urs.com.
AECOM and URS and their respective directors and executive officers and
other members of management and employees may be deemed to be
participants in the solicitation of proxies in respect of the proposed
transaction. Information about AECOM’ directors and executive officers
is available in AECOM proxy statement for its 2014 Annual Meeting of
Stockholders filed with the SEC on Jan. 24, 2014. Information about
URS’s directors and executive officers is available in URS’s proxy
statement for its 2014 Annual Meeting of Stockholders filed with the SEC
on April 17, 2014. Other information regarding the participants in the
proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in the
joint proxy statement/prospectus and other relevant materials to be
filed with the SEC regarding the merger when they become available.
Investors should read the joint proxy statement/prospectus carefully
when it becomes available before making any voting or investment
decisions. You may obtain free copies of these documents from AECOM or
URS using the sources indicated above.
This document shall not constitute an offer to sell or the solicitation
of an offer to buy any securities, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the requirements
of Section 10 of the U.S. Securities Act of 1933, as amended.
Use of Non-GAAP Financial Measure
In addition to the financial measures prepared in accordance with GAAP,
we use the non-GAAP financial measure “EBITDA.” EBITDA is defined as net
earnings before interest, taxes, depreciation and amortization expense.
EBITDA is not a measure of operating performance under GAAP. We believe
that the use of this non-GAAP measure helps investors to gain a better
understanding of our core operating results and future prospects,
consistent with how management measures and forecasts our performance,
especially when comparing such results to previous periods or forecasts.
When analyzing our operating performance, investors should not consider
this non-GAAP measure as a substitute for net income prepared in
accordance with GAAP.
|
|
|
Reconciliation of EBITDA to Net Income Attributable to the Company
|
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Calendar Year Ended December 2013
|
|
|
|
|
|
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US$ Millions
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
|
|
1,258.8
|
|
|
Less: Interest
|
|
|
|
(126.1)
|
|
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Less: Depreciation and amortization
|
|
|
|
(356.9)
|
|
Income attributable to the Company before income taxes
|
|
|
|
775.8
|
|
|
Less: Income tax expense
|
|
|
|
(271.1)
|
|
Net income attributable to the Company
|
|
|
|
504.7
|
|
|
|
|
|
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Source: AECOM Technology Corporation
AECOM Media:
Paul Gennaro, 212-973-3167
SVP & Chief
Communications Officer
Paul.Gennaro@aecom.com
or
AECOM
Investors:
Paul Cyril, 213-593-8322
SVP, Investor Relations
Paul.Cyril@aecom.com
or
URS
Media:
Sard Verbinnen
Hugh Burns, Ron Low and Delia Cannan
212-687-8080
HBurns@sardverb.com
RLow@sardverb.com
DCannan@sardverb.com
or
URS
Investors:
Sam Ramraj, 415-774-2700
VP, Investor Relations
Sam.Ramraj@urs.com
