DALLAS, Nov. 30, 2020 /PRNewswire/ -- Jacobs
(NYSE:J) and PA Consulting, a leading innovation and transformation
consulting firm, announced today that they will form a strategic
partnership in which Jacobs will acquire a 65% stake in PA. The
investment places an enterprise value of PA at £1.825 billion
($2.4 billion). The remaining 35%
stake will be held by PA employees, following the exit of existing
majority stakeholder, The Carlyle Group.
"We are on the cusp of the next digital revolution as advances
across 5G-driven compute power, robotics, autonomous technology,
machine learning automation and geospatial technology converge to
provide solutions to many of the world's most complex challenges,
including disruption to traditional business models," said Jacobs
Chair and CEO Steve Demetriou. "Our
partnership with PA forms a unique offering in the market that
combines strategic front-end consulting and deep domain knowledge
across key sectors with next generation science and technology
expertise.
Over the last several years we have transformed Jacobs to a
leading technology enabled solutions provider built on a foundation
of strong core values with an inclusive and diverse culture. This
strategic partnership is an intentional move in accelerating our
strategy to lead the market as a company like no other."
PA has delivered strong growth over the last five years,
resulting in EBITDA more than doubling over the period and
achieving compound annual revenue growth of 12% since 2016.
From its inception in 1943, PA has worked with a wide range of
clients – from start-ups with a promising idea to change the world
to some of the most important global companies and organizations –
to find innovative ways to be faster and nimbler, and to
create the services and products that grow their businesses,
delight their customers and the global community. PA has developed
world-leading innovations with Virgin Hyperloop to reinvent
transport, with Ori Biotech to revolutionize cell and gene therapy
manufacturing and with public utilities leveraging iPredict™, the
world's first AI and Machine Learning system to predict failures in
critical underground electricity distribution assets.
Partnership Between Jacobs and PA Accelerates Shift to Global
Leader in High Value Solutions
- Sets a new industry benchmark in differentiated solutions that
deliver end-to-end value for Jacobs and PA clients, employees and
investors – changing the shape of the industry.
- Transforms PA to a global player at scale; accelerating their
growth plan through access to Jacobs client base and global
platform, particularly in the U.S.
- Advances opportunities for both Jacobs and PA employees through
collaboration and co-creation of innovative solutions.
- Provides timely positioning of ingenious solutions-based
platforms for enhanced agility in response to current-day
challenges such as climate change, decarbonization, urbanization
and the ongoing healthcare crisis.
- Targets joint go-to-market teams toward initial high growth
sectors of Health and Life Sciences, Public Services, Consumer and
Manufacturing, and Defense and Security to capitalize on immediate
revenue synergy opportunities.
CEO of PA Consulting Ken Toombs said, ''We see Jacobs as the
ideal partner for PA, leveraging their client relationship networks
and global platform to position us for the next phase of growth.
Their purpose to create a connected sustainable world and
commitment to an inclusive future for all aligns with our own
purpose – Bringing Ingenuity to Life – and our commitment to
innovate towards a positive human future. We look forward to
continuing to deliver ingenious solutions for our clients,
supported by Jacobs' investment and our partnership.''
Demetriou continued, "The partnership respects and preserves
PA's heritage and independence under Ken
Toombs' leadership – while creating superior value for
Jacobs shareholders and significant opportunities for our clients
and employees."
Transaction Terms and Financing
The transaction is structured as a private equity style
investment, with Jacobs acquiring a 65% stake in the form of
preferred and common equity, with PA employee rollover constituting
the remaining 35% ownership stake at closing. Preferred equity
holders receive a 12% compounded annual coupon accrual. A sweet
equity incentive pool of 25% of the common equity is available for
issuance to current and future partners and employees of PA. The
sweet equity pool will be funded after satisfying the coupon on the
preferred equity. In addition, Jacobs will provide debt financing
to PA in the form of a £650 million ($845
million) term loan and a revolving credit facility of up to
£100 million ($130 million) to fund
future growth. Jacobs intends to fund the acquisition through a
combination of cash-on-hand and existing and incremental debt
facilities.
The transaction, will be implemented by way of a U.K. Scheme of
Arrangement and is subject to the satisfaction of customary closing
conditions, including the approval of the current shareholders of
PA and the U.K. Court (pursuant to the Scheme), as well as the U.K.
Financial Conduct Authority.
Jacobs expects the transaction to close by the end of its fiscal
2021 second quarter.
Advisors
Rothschild & Co. is serving as exclusive financial advisor
and Fried, Frank, Harris, Shriver & Jacobson LLP is serving as
legal counsel to Jacobs.
J.P. Morgan and HSBC are serving as financial advisors to The
Carlyle Group and PA. Linklaters is serving as legal counsel to The
Carlyle Group and PA, and Dickson
Minto is serving as legal counsel to the management of
PA.
Conference Call
Jacobs will host a conference call today, Monday, November 30, 2020, at 8:30 a.m. ET to discuss this transaction with the
financial community. Interested parties can listen to the
conference call via a webcast or dial in and view the accompanying
slides at jacobs.com and paconsulting.com.
Conference ID: 5778514
Participant Toll Free Dial-In Number: (833) 231-8270
Participant International Dial-In Number: (647) 689-4115
About Jacobs
At Jacobs, we're challenging today to reinvent tomorrow by
solving the world's most critical problems for thriving cities,
resilient environments, mission-critical outcomes, operational
advancement, scientific discovery and cutting-edge manufacturing,
turning abstract ideas into realities that transform the world for
good. With approximately $14 billion
in revenue and a talent force of more than 55,000, Jacobs provides
a full spectrum of professional services including consulting,
technical, scientific and project delivery for the government and
private sector. Visit jacobs.com and connect with Jacobs
on Facebook, Instagram, LinkedIn and Twitter.
About PA Consulting
We believe in the power of ingenuity to build a positive human
future in a technology-driven world. As strategies, technologies
and innovation collide, we create opportunity from complexity. Our
diverse teams of experts combine innovative thinking and
breakthrough use of technologies to progress further, faster. Our
clients adapt and transform, and together we achieve enduring
results. An innovation and transformation consultancy, we are over
3,200 specialists in defence and security, consumer and
manufacturing, government, health and life sciences, transport,
energy and utilities, and financial services. Our people are
strategists, innovators, designers, consultants, digital experts,
scientists, engineers and technologists. We operate globally from
offices across the U.K., U.S., Europe, and the Nordics.
Forward-Looking Statements
Certain statements contained in this press release constitute
forward-looking statements as such term is defined in Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and such statements
are intended to be covered by the safe harbor provided by the same.
Statements made in this release that are not based on historical
fact are forward-looking statements, including statements regarding
whether and when the proposed transaction will be consummated and
the anticipated benefits thereof. We base these forward-looking
statements on management's current estimates and expectations as
well as currently available competitive, financial and economic
data. Forward-looking statements, however, are inherently
uncertain. There are a variety of risks, uncertainties and other
factors that could cause business results to differ materially from
our forward-looking statements. The potential risks and
uncertainties include, among others, the possibility that PA
Consulting may be unable to obtain required shareholder or
regulatory approval or that other conditions to closing the
transaction may not be satisfied, such that the transaction will
not close or that the closing may be delayed; general economic
conditions; the possibility of unexpected costs, liabilities or
delays in connection with the transaction; risks that the
transaction disrupts current plans and operations of Jacobs or PA
Consulting; the ability to recognize the benefits of the
transaction; the amount of the costs, fees, expenses and charges
related to the transaction and the actual terms of any financings
that will be obtained for the transaction; and the outcome of any
legal proceedings related to the transaction. For a description of
some additional factors that may occur that could cause actual
results to differ from our forward-looking statements, see our
Annual Report on Form 10-K for the year ended October 2, 2020, and in particular the
discussions contained under Item 1 - Business; Item 1A - Risk
Factors; Item 3 - Legal Proceedings; and Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of
Operations, as well as the company's other filings with the
Securities and Exchange Commission. The company is not under any
duty to update any of the forward-looking statements after the date
of this press release to conform to actual results, except as
required by applicable law.
Non-GAAP Financial Measures
In this press release, the company has included a certain
non-GAAP financial measure as defined in Regulation G promulgated
under the Securities Exchange Act of 1934, as amended. The non-GAAP
financial measure included in this press release is the expected
accretion of the transaction to Jacobs' adjusted earnings per share
(EPS) for fiscal 2022. Reconciliation of this financial measure to
the most directly comparable GAAP measure is not available without
unreasonable efforts because Jacobs cannot predict with sufficient
certainty all the components required to provide such
reconciliation, including with respect to the costs and charges
relating to transaction related expenses to be incurred in fiscal
2022 and subsequent periods. Jacobs provides non-GAAP financial
measures to supplement U.S. GAAP measures, as they provide
additional insight into Jacobs' financial results. However,
non-GAAP measures have limitations as analytical tools and should
not be considered in isolation and are not in accordance, or a
substitute for, U.S. GAAP. In addition, other companies may define
non-GAAP measures differently, which limits the ability of
investors to compare non-GAAP measures of Jacobs to those used by
peer companies.
For additional information contact:
Investors:
Jonathan Doros, 214-583-8596
jonathan.doros@jacobs.com
Media:
Marietta Hannigan, 214-920-8035
marietta.hannigan@jacobs.com
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SOURCE Jacobs