WorleyParsons is doubling its size with the $4.6 billion acquisition of Jacobs Engineering’s energy, chemicals and resources division

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  • WorleyParsons announced the the acquisition of Jacobs’ ECR division for $US3.3 billion ($A4.6 billion).
  • The deal will be funded by a $A2.9 billion entitlement offer, $A985 million stock issued to Jacobs and new debt.
  • Jacobs ECR, a technical services provider across hydrocarbons, chemicals and mining and minerals, has annual revenue of $US3.4 billion.

Australian engineering services group WorleyParsons is almost doubling its size by buying US-based Jacobs Engineering’s energy, chemicals and resources (ECR) division for $US3.3 billion ($A4.6 billion).

The agreement with the company from Texas, expected to complete in the first half of 2019, will see WorleyParsons emerge with revenue of $A9.2 billion, up from $A4.7 billion, and with 57,600 staff, up from 26,700.

The company says the deal creates the world’s largest professional services provider in resources and energy.

Jacobs ECR, a technical services provider across hydrocarbons, chemicals and mining and minerals, has annual revenue of $US3.4 billion ($A4.8 billion) and long-term, blue-chip clients in the US, Canada, the Middle East and India.

WorleyParsons CEO Andrew Wood says the acquisition is important for customers, shareholders and employees.

“We are excited to combine Jacobs ECR’s world-class capabilities with our global platform to create a leader across our key focus sectors, with greater earnings diversification and resilience,” he says.

“The transaction will bring complementary capabilities in key business lines, including a best-in-class onshore and downstream MMO (maintenance, modifications and operations) capability, allowing customers to benefit from an expanded integrated solutions offering.”

The deal will be funded through an entitlement offer of $A2.9 billion, by issuing $A985 million in WorleyParsons shares to Jacobs and debt of $A895 million.

The shares issued to Jacobs will be at $16.92 per share, which is equal to the theoretical ex-rights price. WorleyParsons shares last traded at $17.84. They are currently in a trading halt.

John Grill, the founder and Chairman of WorleyParsons, has committed to take up $A100 million in the entitlement offer.

Jacobs will own about 11% of the enlarged WorleyParsons post transaction.

WorleyParsons expects cost synergies of $A130 million a year, expected to be achieved within two years.

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