Market Overview

Jacobs Engineering To Buy KeyW In $815M Deal

Jacobs Engineering To Buy KeyW In $815M Deal

Jacobs Engineering Group Inc (NYSE: JEC) and KEYW Holding Corp. (NYSE: KEYW) announced a definitive merger agreement Monday.  

The $815-million deal makes KeyW — an intelligence, cyber, mission and IT analytics company operating in the intelligence and national security spaces — a wholly owned indirect subsidiary of Jacobs

What Happened

Jacobs is acquiring KeyW for $11.25 per share in cash. The transaction's enterprise value of about $815 million is net of tax assets and includes about $272 million in KeyW net debt, according to KeyW. 

The merger is being conducted at a 43-percent premium to KeyW's April 18 closing price. 

The deal has been approved by both company's boards.

Why It's Important

The transaction value represents an enterprise value-to-expected 2020 adjusted EBITDA multiple of approximately 10x, assuming full run-rate cost synergies of $15 million, Jacobs said in a press release. 

The merger dovetails with Jacobs' aerospace, technology and nuclear transformational strategy, according to the Dallas-based professional services firm. 

"Jacobs' global reach and proven track record executing large complex enterprise contracts provide a powerful platform to unleash KeyW's complementary rapid technology development," Steve Demetriou, Jacobs' chair and CEO Steve Demetriou, said in a statement.

"We are positioned to further accelerate KeyW's success in leveraging its unique technical solutions and drive value creation for shareholders and customers alike, including a multibillion-dollar space opportunity delivering next generation intelligence and analytics solutions."

Bill Weber, KeyW's president and CEO, said the merger provides "significant, certain and immediate cash value" for the company's shareholders.

"Cultural fit and exceptional shareholder value were of paramount importance in the criteria for partnership in KeyW's next chapter."

What's Next

The closing of the merger transaction hinges on KeyW shareholders tendering more than 50 percent of outstanding shares. 

After a successful closing, Jacobs said it will acquire any remaining KeyW common shares that were not tendered via a second-step merger at the same terms. 

The companies expect the merger to close by Aug. 31., subject to customary conditions and approvals. 

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