URS bids for Washington Group3 July 2007
URS is to buy Washington Group International in a US$2.6bn deal that would create one of the largest engineering and construction businesses.
The move, which has the backing of the boards of both US-based companies, would see the merged group placed in a stronger position to pursue market share in high growth sectors worldwide, such as infrastructure, including tunnelling, as well as energy and environmental services.
Tunnel projects in which URS or Washington Group have been involved include: the Downtown Seattle Transit Tunnel; the Metro Gold Line Eastside Extension in Los Angeles; Long Island Rail Road East Side Access; participation in a JV studying high-speed rail for California; plus, major sewerage schemes such as in Sacramento, and a bored tunnel plan under San Francisco Bay for water supply.
Transaction terms call for a cash and stock package where Washington Group shareholders are offered US$43.80 plus 0.772 shares of URS stock for each share they hold. The offer, based on a 55:45 mix of cash and stock, values Washington Group share at US$80.00, which is a 14% premium. Financing has been committed by Wells Fargo and Morgan Stanley for the cash in the deal, which is expected to close late 2007, subject to approvals. The deal would leave the enlarged, URS group with US$1.5bn of debt. Pro forma revenues for 2006 were put at US$7.6bn.