US-based Jacobs Engineering Group announced on 20 August that it has entered into an agreement to acquire UK oilfield services provider John Wood Group's nuclear business for an enterprise value of GBP250 million ($300 million) on a debt-free, cash-free basis. The transaction represents an enterprise value-to-expected pro forma calendar year 2019 adjusted EBITDA multiple of 7.9x, assuming GBP10 million of full run-rate cost synergies from the combined organisations. Jacobs expects to close the acquisition by its fiscal 2020 second quarter.
This acquisition further strengthens Jacobs' position in highly profitable and complementary sectors within nuclear and defence, enhancing our recognised programme management skills with deep, technical expertise," said Jacobs Chair and CEO Steve Demetriou. Wood Nuclear provides solutions that span the entire life cycle of the nuclear industry and provides programme management technical and consulting services in areas such as decommissioning, nuclear new build and operational support in the civil nuclear and defence segments.
Jacobs has agreed to pay a fee of approximately $9 million to John Wood Group in certain circumstances where the transaction is not cleared by the U.K. Competition and Markets Authority. Jacobs expects to finance the transaction through cash on hand and existing credit facilities. Rothschild & Co is serving as sole financial advisor to Jacobs, and Paul Hastings is serving as legal counsel to Jacobs. Price Waterhouse Coopers is serving as financial advisor to John Wood Group, and Slaughter and May is serving as legal counsel. Wood said it was acting to reduce its debt burden as it reported a 2.6% drop in first-half revenue. Wood’s debt grew in 2017 when it paid $2.7 billion to expand into the US onshore shale oil and gas sector with the purchase of Amec Foster Wheeler.
The Aberdeen-based company said the disposal of the business in designing, constructing and maintaining nuclear plants and assets would allow it to reduce its leverage to 1.5 times net earnings in the first quarter of 2020.