Morning Briefing - October 15, 2019
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October 15, 2019

AECOM to Sell Government Contracting Biz to Investment Group for $2.4B

By ExchangeMonitor

AECOM announced Monday it plans to sell its government contracting business for $2.4 billion to two investment firms rather than advancing its previous plan to spin the branch off into a stand-alone public company.

Affiliates of New York City-based American Securities and Lindsay Goldberg are joining to buy AECOM’s Management Services business.

In June, AECOM announced plans for a 2020 initial public offering for the Management Services group, which holds billions of dollars’ worth of contracts with the Energy Department and Department of Defense. However, the infrastructure and engineering giant quickly received offers from parties interested in buying the business outright.

“When we announced the spin we immediately had inbound interest” from prospects, Chairman and CEO Michael Burke said in a Monday call with Wall Street analysts. Bidding was “very competitive” and soon narrowed to three potential groups of buyers.

Last Thursday night, AECOM “reached a final agreement with one of the parties,” Burke said, not disclosing the other suitors.

The deal is expected to close within 100 days, which translates to late January, providing the necessary regulatory approvals are reached without trouble. At that time, the new government services company is expected to receive a new name.  Under the IPO scenario, AECOM expected to complete the spinoff in the latter half of 2020.

“The Management Services business is a proven industry leader with distinctive expertise that plays a vital role in supporting governments around the world to execute programs of critical importance,” Russell Triedman, partner at Lindsay Goldberg, said in a joint press release with American Securities.