Jacobs Buys Wood Group Nuclear Unit
Jacobs, a major professional services provider to the U.S. government, announced Aug. 20 it has entered into an agreement to acquire John Wood Group’s nuclear business for £250 million ($300 million).
“This acquisition further strengthens Jacobs’ position in highly profitable and complementary sectors within nuclear and defense, enhancing our recognized program management skills with deep, technical expertise,” Jacobs Chair and CEO Steve Demetriou said.
Jacobs provides scientific, technical, professional and construction services, as well as program-management for business, industrial, commercial, government and infrastructure sectors. Wood designs, delivers and maintains strategic and complex nuclear generation plants and assets. Jacobs said the cash acquisition brings deep technical expertise with unique engineering and scientific skills and a portfolio supporting major national programs in nuclear defense systems, new build and operations and decommissioning.
Initial reactions from financial analysts who cover aerospace and defense companies were positive. “The proposed acquisition of Wood Group’s Nuclear business appears to be a modestly accretive, strategic fit,” Cowen analysts Gautum Khanna, Jeff Molinari and Dan Flick said.
Around 70% of Wood’s nuclear sales are from higher-margin consulting, defense and design, and the acquisition would add around 2,000 employees to Jacob Engineering Group’s roughly 5,200 nuclear employees. “Wood excels in nuclear reactor and safety-related equipment and balance-of-plant, which should complement JEC’s strength areas of balance-of-plant, non-nuclear and supporting infrastructure, and large-scale project and program management,” the Cowen team said.
“From a strategic perspective, the transaction is consistent with JEC’s previously stated plans to continue doing bolt-on deals with higher margins and a technical services component,” UBS analyst Steven Fisher said. “Accordingly, we don’t think a deal of this size or nature will be a surprise.”
The deal is subject to customary approvals, but also by the UK Competition and Markets Authority. Furthermore, Jacobs has agreed to pay a fee of about $9 million to Wood Group “in certain circumstances where the transaction is not cleared.” Jacobs said it expects to close the acquisition by its fiscal 2020 second quarter.