In a deal rumored for weeks, two of the largest players in the Department of Energy’s weapons complex will merge into a public company majority-owned by Jacobs [J] shareholders.
Virginia-based government contractor Amentum said late Monday it reached a deal to combine with the government operations business of Dallas-based Jacobs Solutions and create a new $13-billion, publicly-traded company with 53,000 employees worldwide.
In a press release, Amentum said it was merging with Jacobs Critical Mission Solutions and Cyber and Intelligence businesses. The transaction should close pending regulatory approvals in the second half of the 2024 fiscal year. That translates to after March 2024.
Jacobs and Jacobs’ shareholders will own up to 63% of the new combined company, the Dallas-based engineering, procurement and construction company said in its own press release.
Amentum CEO John Heller will be CEO of the merged company. Steve Arnette, a Jacobs executive vice president who heads Critical Mission Solutions, will serve as chief operations officer. Jacobs’ current executive chair Steve Demetriou will become executive chair of the combined company, the companies said.
The newly-formed company will be a “pure play government technology solutions prime” with more than 27,000 employees with government clearance, Jacobs said. It will get the bulk of its revenue from government contracts.
Jacobs will receive a $1 billion cash dividend at closing, plus additional value after closing, through disposition of a retained stake in the combined company. Jacobs expects the spinoff will enable it to be more focused on high-technology businesses. Excluding the businesses being separated, Jacobs generated about $10.9 billion in revenue in fiscal year 2023.
The Jacobs board has already approved the deal, according to the Amentum press release.
“By separating CMS and associated Cyber & Intelligence Solutions, Jacobs will streamline our business portfolio and transform into a more focused, higher-margin company more closely aligned with key global mega trends,” said Jacobs CEO Bob Pragada in the release.
“Our combined company will deliver extensive expertise in the government’s highest priority areas of energy, space exploration, intelligence and analytics, and digital modernization. We look forward to the union of our strong teams and a bright future ahead,” Heller said in Amentum’s press release.
Jacobs first announced the planned spinoff in May. Jacobs, and its CH2M unit, lead environmental cleanup at DoE’s Idaho National Laboratory, the Paducah Site in Kentucky and the West Valley Demonstration Project in New York state. The company is also a junior partner on the Honeywell [HON]-led team that manages the Nevada National Security Site for DoE’s semiautonomous National Nuclear Security Administration.
Amentum is the lead partner on a number of big contracts around the DoE weapons complex, including leading remediation at the Oak Ridge Site in Tennessee, where Jacobs is one of the minority partners.
Jacobs planned to brief the public on the merger in a conference call scheduled for 9:00 a.m. Eastern time on Tuesday. The company’s separate ’ fourth-quarter investor conference call was scheduled for 10:00 a.m. Eastern time on Tuesday.
This story first appeared in Defense Daily affiliate publication Weapons Complex Morning Briefing.