US-based Jacobs Engineering Group (Jacobs) has agreed to sell its energy, chemicals and resources (ECR) segment to WorleyParsons for $3.3bn.
Under a definitive agreement between the companies, the transaction value includes $2.6bn in cash and $700m in WorleyParsons ordinary shares.
Jacobs intends to focus on its higher margin lines of business, including aerospace, technology, environmental and nuclear (ATEN), as well as buildings, infrastructure and advanced facilities (BIAF).
Jacobs chairman and CEO Steve Demetriou said: “For Jacobs, this transaction marks an inflection point in our portfolio transformation focused on more consistent, higher margin growth as a leader solving the world’s critical challenges.
“The increased financial flexibility we gain from this sale better positions us to invest in our ATEN and BIAF businesses, focusing our premier talent and expertise on technology, innovation and sustainable solutions that are priorities for our infrastructure and government services clients.
These capabilities, along with our strong backlog and efficient global platform, will further strengthen our global leadership in these segments to drive meaningful value creation.”
Jacobs will use the nearly $2.6bn of proceeds to pay down floating-rate debt and to deploy capital for increased shareholder value, including mergers and acquisitions.
The deal is expected to close in the first half of next year after obtaining all customary closing conditions and regulatory approvals.
Upon completion of the deal, Jacobs will receive approximately 58.2 million shares of WorleyParsons stock.
Jacobs CFO Kevin Berryman said: “While we are in the process of finalising our fiscal 2018 results, our current view is materially consistent with previously announced guidance for the year.
“In addition, we continue to believe that the adjusted EPS guidance provided for fiscal 2019 remains appropriate, keeping in mind that such guidance did not reflect any impact from the pending transaction announced today.”