By Lisa Kerner
Charlotte, N.C., May 29 - URS Corp. entered into a definitive agreement to acquire Washington Group International Inc. in a cash and stock transaction valued at approximately $2.6 billion.
Washington Group stockholders will receive $43.80 in cash and 0.772 of a share of URS common stock for each Washington Group share.
Both companies' boards of directors have unanimously approved the deal, which is slated to close in the second half of 2007. URS will finance the transaction
The combined company will be called URS Corp. and will have estimated combined 2007 revenues of $8.6 billion as well as projects in over 50 countries and more than 54,000 employees. URS expects to achieve annual pre-tax cost synergies of $50 million to $55 million in 2008.
URS has committed debt financing from Wells Fargo and Morgan Stanley for the cash portion of the transaction. Following the close of the transaction, URS is expected to have some $1.5 billion in debt and a debt-to-total capital ratio of about 37%.
The merger agreement includes termination rights for both companies, with URS required to pay $50 million or $70 million, and Washington Group required to pay $70 million under specified circumstances.
"Through this combination, both companies will be better positioned to capture growth from favorable trends across the engineering and construction sectors, including the increased investment in infrastructure projects, the focus on emissions reduction and energy independence in the power market, and the increased use of outsourcing by federal agencies, such as the U.S. Departments of Defense and Energy," URS chairman and chief executive officer Martin M. Koffel said in a company news release. Koffel will lead URS Corp. as chief executive officer.
"This transaction will create a new leader in the engineering and construction industry that will deliver superior value to our stockholders, customers and employees over the long term," Washington Group chief executive officer Stephen G. Hanks added.
"The increased scale and resources of the combined company, including URS' significant design resources, will further support our ability to compete for new opportunities in high growth markets."
URS was advised by Morgan Stanley, UBS, Latham & Watkins and Cooley Godward Kronish LLP. Washington Group was advised by Goldman Sachs, Wachtell, Lipton, Rosen & Katz and Jones Day.
Washington Group is a Boise, Idaho, engineering company.
URS is an engineering design services company located in San Francisco.
| Acquirer: | URS Corp.
|
| Target: | Washington Group International Inc.
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| Transaction value: | $2.6 billion
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| Price per share: | $43.80 in cash and 0.772 of a share of URS common stock
|
| Announcement date: | May 29
|
| Expected closing: | Second half of 2007
|
| Termination fee: | $50 million to $70 million
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| Stock price for acquirer: | NYSE: URS: $46.89 on May 25
|
| Stock price for target: | NYSE: WNG: $69.97 on May 25
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