Jacobs said that its Board of Directors unanimously accepted a strategy to separate its Critical Mission Solutions (CMS) division from Jacobs, resulting in two distinct firms, each with a better chance of success.
“This announcement marks a significant milestone in our long track record of taking bold actions to drive value creation,” said Jacobs CEO Bob Pragada.
“By separating CMS, we will simplify our business portfolio and transform Jacobs into a higher-growth, higher-margin company that is more closely aligned with key global megatrends and growth sectors.
” The benefits of the separation are as compelling for the CMS industry. CMS has evolved into an industry leader in government services, with enormous scale, distinctive offerings, and extensive customer connections.
CMS will be able to better focus on its own strategy and operational demands as an independent firm, resulting in increased growth momentum. We feel that the separation will benefit all parties.”
Benefits of the Separation Transaction
As separate companies, Jacobs and the CMS business are expected to benefit from:
1-Increased focus, as well as the opportunity to pursue customized strategy and operational efforts tailored to the industries in which they individually operate.
2-Tailored capital allocation and structure, including equity, aimed at their respective growth potential and in accordance with industry dynamics.
3-Incentive programs that are more closely aligned with individual business success improve the capacity to attract and retain outstanding employees.
4-Investment profiles that correspond to investor expectations and preferences for various market and business aspect
5-Proven leadership teams and motivated staff providing clients with world-class services
Two leading companies
Jacobs: Following the separation, Jacobs will remain a leading provider of technology-enabled solutions for the world’s most demanding critical infrastructure and advanced industrial challenges.
The streamlined portfolio will combine leading global capabilities in consulting, planning, engineering, design, and program management with data science and technology-enabled expertise to deliver differentiated end-to-end solutions to clients worldwide, primarily state, local, and national governments, as well as private sector clients.
The Company’s market-leading positions in the appealing water and environment, energy transformation, transportation, and advanced manufacturing sectors are all strongly integrated with the Company’s three growth accelerators – Climate Response, Consulting and Advisory, and Data Solutions. In fiscal year 2022, Jacobs generated approximately $10.5 billion in sales excluding the businesses to be separated.
Critical Mission Solutions (CMS): CMS is a significant provider of technical consulting, applied science research, training, intelligent asset management, and program management services to federal government agencies, generating roughly $4.4 billion in revenue in fiscal year 2022.
CMS provides mission-critical technology-enabled solutions in space, national security, nuclear reprocessing, and 5G technologies.
CMS’s business is supported by a solid foundation of recurring, long-term enterprise contracts, where CMS’s unique skills and extensive client connections provide it a competitive advantage.
Steve Arnette, EVP and President of CMS, will continue to lead CMS.
Separation details
Following the separation, Jacobs is committed to retaining an investment grade profile. CMS’s planned capital structure, governance, and other issues are still being worked out and will be published at a later date.
Jacobs intends to complete the separation in the second half of fiscal year 2024 with a tax-free payout to Jacobs stockholders for U.S. federal income tax purposes.
The separation transaction is subject to final approval by Jacobs’ Board of Directors and other customary conditions, such as receipt of a private letter ruling from the Internal Revenue Service, tax advisor opinions, and the filing and effectiveness of a registration statement with the United States Securities and Exchange Commission. Jacobs wants to offer separation updates as needed.
Source: Jacobs
