Contractor Jacobs to merge government consulting units with rival Amentum (updated)

Jacobs Solutions

21/11/2023 05:17

(Adds details of the deal and background)
       Nov 20 (Reuters) - Engineering consultant Jacobs
Solutions Inc  J.N  said on Monday it will spin off and merge
its government consulting businesses with rival contractor
Amentum Services Inc and receive $1 billion in cash proceeds at
the closing of the deal.
    Jacobs said in a statement it expects to have up to 63%
stake in the combined company, with 51% held by shareholders and
7.5-12% retained by the company.
        The combined entity, which will include units Critical
Mission Solutions (CMS) and Cyber & Intelligence government
services, will become a new publicly listed company, Jacobs
added.
  
        The company had said in May it was 
    exploring
     a tax-free spin-off of the CMS business to streamline its
operations and boost margins. 
    Sources
     told Reuters in October that the CMS unit could be valued
at more than $4 billion.
  
    The CMS platform provides cybersecurity, data analytics and
software application services and consulting to civilian,
defense and intelligence clients in industries including space,
national security, nuclear waste and 5G technology.
        Jacobs said it will use the cash proceeds to repay debt,
and will dispose its retained stake in the combined company
within 12 months.
  
    John Heller, the current chief executive of Amentum, will
serve as the CEO of the combined company, while Jacobs'
Executive Chair Steve Demetriou will become the executive chair
of the combined company.
    Jacobs will retain its data solutions and digital
technologies business after the spin-off.

 (Reporting by Akanksha Khushi and Utkarsh Shetti in Bengaluru;
Editing by Rashmi Aich and Eileen Soreng)
 ((Akanksha.Khushi@thomsonreuters.com;))