Jacobs To Spin-off And Merge Its Critical Solutions Business With Amentum

(RTTNews) - Jacobs (J) said that it agreed to spin-off and combine its Critical Mission Solutions and Cyber & Intelligence government services businesses with Amentum, an engineering and technology solutions provider, to create a new, publicly-traded player in the government services sector.

Jacobs noted that it will retain its next-generation data solutions and digital technologies business, which is part of its Divergent Solutions or DVS segment and core to delivering digitally enabled critical infrastructure solutions to clients.

Upon completion of the deal, Jacobs Executive Chair Steve Demetriou will become Executive Chair of the combined company. John Heller, current chief executive officer of Amentum, will serve as CEO of the combined company and sit on the combined company's board, and Steve Arnette, EVP and President of CMS will serve as chief operating officer.

Jacobs noted that the board of directors of the combined company will initially be composed of an equal number of directors appointed by Jacobs and Amentum. Members of the combined company's senior management team will be drawn from both companies and will be announced at a later date as integration planning progresses.

Jacobs and its shareholders will own 58.5%-63% of the combined company's common shares upon consummation of the transaction, consisting of 51% Jacobs' shareholders ownership and Jacobs retaining 7.5%-12%. Funds managed by American Securities and Lindsay Goldberg, the current owners of Amentum, will own no less than 37% of the combined company's common shares upon consummation of the transaction.

Jacobs expects to receive cash proceeds of $1 billion at close. Jacobs is committed to maintaining its investment grade credit profile following the separation and expects to use the cash received at close to repay debt. Jacobs also expects to realize additional value after closing through the disposition of its retained equity stake in the combined company within 12 months.

The transaction is expected to close in the second half of fiscal year 2024.