In a long-rumored deal, Amentum and Jacobs, two of the largest players in the Department of Energy nuclear business, will next year merge into a public company majority-owned by Jacobs shareholders.
The companies on Monday announced that Amentum would combine with the government operations and cyber businesses of Dallas-based Jacobs Solutions and create a new $13-billion, publicly-traded company with 53,000 employees worldwide. About half of these will have government security clearances and all of the combined company’s business will come from government contracts, the companies said.
In the nuclear realm, the new company will focus mostly on the cleanup and maintenance of nuclear weapons, but it will also be “a leading provider of technology-agnostic solutions to the global nuclear renaissance,” Jacobs CEO Bob Pragada said Tuesday on a conference call with investors.
The transaction should close pending regulatory approvals in the second half of Jacobs’ 2024 fiscal year. That translates to after March 2024.
Jacobs and Jacobs’ shareholders will own up to 63% of the new combined entity, the Dallas-based engineering, procurement and construction company said in its own press release. The new company will be 51% owned by Jacobs shareholders, with Jacobs Solutions keeping anywhere from a 7.5% to 12% interest in the combined company, according to a Jacobs slide presentation.
In a conference call with analysts on Tuesday morning, Jacobs CEO Bob Pragada said he did not expect too much antitrust scrutiny from the Federal Trade Commission, which has the authority to block what it considers monopolistic mergers.
Asked by an analyst whether he had antitrust concerts, Pragada said “considering there’s less than 3% of overlap between the two portfolios, our answer is no.”
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.
“I look forward to being part of this journey as Amentum’s executive chair,” Steve Demetriou, Jacobs’ executive chair, said Monday on Jacobs’ analyst call.
In an afternoon conference call with reporters, Heller was not ready to say if the new public company will be called Amentum or something else, and whether it will be based out of Amentum’s current Chantilly, Va., headquarters. Those issues will be worked out in the next six-to-nine months before the merger is final, he said.
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 combined company would have a $50-billion pipeline and $4.2 billion in net debt at closing, according to Jacobs.
Nuclear and environmental work for clients such as the Department of Energy, Environmental Protection Agency and the United Kingdom’s National Decommissioning Authority should account for about 30% of the merged company’s earnings before interest, taxation, depreciation and amortization. The metric essentially tracks how profitable core operations are by excluding the effects of outside financial obligations.
The Jacobs board has already approved the deal, according to the Amentum press release. The financial investment firms that own Amentum have also approved the deal, Jacobs executives said Tuesday during the company’s quarterly earnings call.
