Jacobs Solutions Inc J disclosed a definitive deal to spin off and combine its Critical Mission Solutions (CMS) and Cyber & Intelligence government services businesses with Amentum.
Amentum is a global engineering and technology solutions provider. The combination will create a new, publicly traded player in the government services sector.
The new company will have annual revenue of ~$13 billion, comprising Jacobs' Critical Mission Solutions, the Cyber & Intelligence portions of its Divergent Solutions (DVS) business, and Amentum.
Jacobs and its shareholders will own up to 58.5%-63% of the new combined company. Also, the company will retain its data solutions and digital technologies business, a part of its DVS segment.
Post closure, Jacobs will receive cash proceeds of $1 billion, plus additional value, through divestiture of a retained stake in the combined company within 12 months.
Earlier in May, Jacob announced its plan to separate its CMS business from Jacobs, creating two independent companies.
The company expects the tax-efficient transaction to drive estimated net cost synergies of $50 million-$70 million.
The transaction is expected to close in H2 FY24, a time frame consistent with the previously announced spin-off.
Jacobs CEO Bob Pragada said, "By separating CMS and associated Cyber & Intelligence Solutions, Jacobs will streamline our business portfolio and transform into a more focused, higher-margin company more closely aligned with key global mega trend."
Jacobs will report Q1 2024 earnings and new productivity targets on November 21, 2023.
Price Action: J shares closed higher by 1.23% at $136.98 on Monday.
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