Jacobs poised to merge government consulting unit with Amentum

Jacobs Solutions

16/11/2023 20:24

By David  Carnevali
       Nov 16 (Reuters) - Engineering consultant Jacobs
Solutions Inc  J.N  is in advanced talks to merge its government
consulting arm at a valuation of more than $4 billion with
private equity-owned Amentum Services Inc, people familiar with
the matter said on Thursday.
    Under the terms discussed, Amentum would merge with Jacobs'
Critical Mission Solutions (CMS) business to create a new
publicly traded company that would be majority-owned by Jacobs'
shareholders, the sources said.
    The contemplated deal would utilize a so-called Reverse
Morris Trust structure that would make the transaction tax-free
to Jacobs shareholders, the sources added.
    If the negotiations between Jacobs and Amentum's owners —
buyout firms American Securities and Lindsay Goldberg — conclude
successfully, a deal may be announced by Nov. 21, when Jacobs is
scheduled to report its fourth-quarter earnings, according to
the sources.
    Jacobs, Amentum, Lindsay Goldberg and American Securities
did not immediately respond to requests for comment.
    Jacobs' 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 CEO Robert Pragada had said on the company's latest
quarterly call in August that "multiple" suitors had expressed
interest in CMS.
    The business, which generated $4.4 billion in revenue in its
latest fiscal year, was awarded a $3.2 billion contract in
February to support several NASA programs, including the Artemis
II mission to the moon.
    The deal with Amentum would free up resources for Jacobs to
focus on its people and places solutions division, which
provides transportation and environmental consulting to
government entities and private sector clients, and PA
Consulting, a management consulting business advising across
several sectors. These operations generated $10.5 billion in
revenue in Jacobs' latest fiscal year.    
    Amentum provides technical and advisory services to
government clients including the Air Force and NASA, as well as
commercial clients such as ExxonMobil  XOM.N  and Caterpillar
 CAT.N . American Securities and Lindsay Goldberg formed the
company by carving it out of engineering consultant Aecom
 ACM.N  in 2020 in a $2.4 billion deal. 
    Amentum bolstered its offerings with the takeover of rival
PAE in 2021 for approximately $1.9 billion, creating a company
with over 50,000 employees and more than $9 billion in revenue.

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 (Reporting by David Carnevali in New York; Editing by Lisa
Shumaker)
 ((David.Carnevali@thomsonreuters.com;))