Construction services company URS Corp. announced it will acquire Washington Group International Inc. for about $2.3 billion to expand into the engineering and management of nuclear, infrastructure, and environmental projects.
Both companies have dam and power construction work in their pedigrees. Most notably, Washington Group’s founding company, Morrison-Knudsen, was a key member of the consortium that built 2,078.8-MW Hoover Dam on the Colorado River.
Under terms of the deal, Washington Group shareholders will receive $43.80 in cash and 0.772 shares of URS common stock for each Washington Group share they own. That values Washington Group at about $80 per share, or $2.3 billion based on Washington Group’s 29.2 million shares outstanding.
In addition to overseeing massive construction projects such as the development of transportation, water and wastewater systems around the world, the combined company also will offer engineering, construction, and maintenance services for fossil fuel and nuclear power plants.
“It positions us in markets that coincide with growth in the economy and markets that are growing,” URS Chairman and Chief Executive Martin Koffel said May 28, citing the power and nuclear power industries. “This whole deal was strategically driven, but it’s got attractive financial metrics as well.”
The price marks a 14 percent premium over Washington Group’s closing stock price of $69.97 on May 25.
Together, the companies would have 2007 revenues of about $8.6 billion, projects in more than 50 countries, and more than 54,000 employees.
The combined company is to be called URS Corp., and be headed by Koffel. The deal is expected to close in the second half of 2007, pending approval by Washington Group and URS shareholders, and regulators.
The San Francisco-based URS said it has commitments from Wells Fargo and Morgan Stanley to provide debt financing for the deal. Morgan Stanley and UBS AG advised URS on the deal, while Goldman Sachs Group Inc. advised the Boise, Idaho-based Washington Group.