Jacobs sells Energy Division to WorleyParsons for $3.3 billion

SMM10, 23 Feb: Jacobs Engineering Group has agreed to sell its energy, chemicals and resources divisions to Australia's WorleyParsons Ltd., for US $3.3 billion to focus on its aerospace and infrastructure businesses for higher profit margins. The Dallas-based company said in a statement that Jacobs would receive $2.6 billion in cash and about 58.2 million WorleyParsons shares, worth about $700m, or about 11 per cent of its shares. The deal is expected to close in the first half of 2019.

Stock price climbing

Jacobs shares rose 6.6 per cent to $77.07 at 11:39 in New York. As of Friday, the company was up 10% this year, while the s & p industrial index was down 3.5%. WorleyParsons fell 3 per cent to A $16.92 on Friday. Trading stopped on Monday.

Demetriou said the price was 11.5 times the unit's earnings before interest, tax, depreciation and amortisation, higher than the current market valuation of similar companies. The sector includes Jacobs's work in the oil, chemicals and mining industries. "from our point of view, we find the value of our business very attractive," Demetriou said.

Jacobs will determine how funds will be allocated from sales three to six months before the end of the transaction. Jacobs will initially use the proceeds to repay its interest rate debt, the company said in a statement.

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