Dallas-based Jacobs (JEC) on April 22 announced that they have entered into a definitive merger agreement pursuant to which Jacobs will acquire KeyW Holding Corp. in a deal valued at $815 million and adds to Jacobs’ cyberintelligence offerings.
Jacobs will pay $11.25 per share in cash for the Hanover, Maryland-based firm.. The transaction has an enterprise value, net of tax assets, of approximately $815 million, including an estimated $272 million of KeyW net debt. 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.
This transaction directly aligns with Jacobs’ Aerospace, Technology and Nuclear (ATN) transformational strategy of delivering innovative and unique, mission-oriented solutions for highly technical and high consequence government priorities, and further positions Jacobs as a leader in high-value Government Services. It allows ATN to expand further its leading portfolio of innovative solutions to its clients.
KeyW is a leading national security provider of advanced engineering and technology solutions for the Intelligence, Cyber and Counterterrorism communities. KeyW brings a unique and differentiated mission-focused technology and capabilities in the areas of intelligence, surveillance and reconnaissance (ISR); cyber operations and training; and mission-critical IT and analytics. Of additional value to Jacobs is the fact that more than 75% of KeyW’s workforce hold high level security clearances. KeyW’s advanced engineering and quick reaction capability supports the accelerated development of collection technology, processing, analysis and dissemination of information across the full spectrum of missions for the Intelligence, Cyber and Counterterrorism communities. Like Jacobs, KeyW has embedded and long-standing client relationships that are underpinned by recurring contracts supporting some of the U.S. government’s most unique and challenging missions.
“Jacobs’ global reach and proven track record executing large complex enterprise contracts provide a powerful platform to unleash KeyW’s complementary rapid technology development,” said Jacobs Chair and CEO Steve Demetriou. “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 multi-billion-dollar space opportunity delivering next generation intelligence and analytics solutions. Given the compelling fit of Jacobs’ capabilities and contract execution expertise with KeyW’s differentiated, mission driven technology, we are optimistic that we can drive strong double-digit adjusted EBITDA growth well into the future.”
KeyW President and CEO Bill Weber said, “This is a winning combination that provides significant, certain and immediate cash value for KeyW’s shareholders as well as an excellent partner for our clients and employees. Cultural fit and exceptional shareholder value were of paramount importance in the criteria for partnership in KeyW’s next chapter. Joining with Jacobs will enable KeyW’s talented team to deliver even more innovative technologies and capabilities to customers.”
KeyW’s ISR capabilities also position Jacobs to expand in the rapidly evolving space-based remote sensing sector. The U.S. Air Force alone is anticipated to invest more than $14 billion next year into its space programs, consistent with its prioritization of space as the next critical domain for enhanced national security.
Establishes Cyber Capabilities and Expands Client Base: With the acquisition of KeyW, Jacobs gains access to advanced offensive and enriched defensive cyber operations and training capabilities. These capabilities include intelligence analysis, research and development, classroom and scenario training, software and hardware engineering and secure mobile communications. With the combined Jacobs and KeyW portfolio, Jacobs will have one of the most advanced, integrated full lifecycle cyber security capabilities supporting the nation’s most sophisticated cyber operations.
Adds New Mission-Critical IT and Analytics Capabilities: KeyW brings differentiated capabilities in high-value, mission-dependent areas of software application development, cloud infrastructure and analytics that permit collection, transportation and analysis of data into actionable intelligence.
Extends Client Base and Portfolio in Mission-Critical, High-Value Recurring Programs: Jacobs and KeyW have highly complementary customer bases within Government Services, which will significantly enhance the Company’s presence with key Intelligence Community clients, expanding its addressable market and exposing additional high-value programs for capture.
Synergistic Opportunities Beyond Government Services: KeyW’s advanced remote data collection and analysis capabilities have broad applicability across Jacobs’ diverse business base yielding synergistic opportunities in intelligent infrastructure, secure water, environmental remediation and resource management.
“As information technology and operation technology converge, we see significant opportunity to leverage KeyW’s technology and innovation across our Buildings, Infrastructure and Advanced Facilities’ client base,” Demetriou added. “Upon completion of the transaction, KeyW will operate within Jacob’s ATN business. The entire Jacobs’ leadership team is excited as we bring these two great companies together as the go-to technical solutions provider, and all welcome KeyW’s talented employees to the Jacobs team.”