Jacobs Solutions Spins Off Its Government Services Business Units, Expects $1B Cash Proceeds
Portfolio Pulse from Lekha Gupta
Jacobs Solutions Inc (NYSE:J) has announced a definitive agreement to spin off its Critical Mission Solutions and Cyber & Intelligence businesses, merging them with Amentum to form a new publicly traded government services company. The new entity will have an estimated annual revenue of $13 billion. Jacobs and its shareholders will own 58.5%-63% of the new company, and Jacobs will retain its data solutions and digital technologies business. Jacobs expects to receive $1 billion in cash proceeds post-closure, with additional value from divesting its retained stake within 12 months. The deal is expected to close in the second half of FY24 and is projected to generate $50 million-$70 million in net cost synergies. Jacobs' CEO Bob Pragada believes this will streamline the company's portfolio and align it with global trends. Jacobs will announce Q1 2024 earnings and new productivity targets on November 21, 2023. The company's stock closed higher by 1.23% at $136.98 on Monday.
November 21, 2023 | 11:04 am
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Jacobs Solutions Inc is spinning off its government services business and merging it with Amentum, expecting to receive $1 billion in cash and additional value from a divestiture. The transaction is anticipated to close in H2 FY24 and aims to achieve significant cost synergies.
The spin-off and merger are significant restructurings that are likely to be viewed positively by investors, as evidenced by the stock's rise following the announcement. The expectation of $1 billion in cash proceeds and cost synergies suggests a strong financial outlook for Jacobs, which could lead to a short-term increase in stock price. The high relevance and importance reflect the direct impact of the news on Jacobs, while the confidence score accounts for the typical uncertainties involved in the completion of such transactions.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100