8-K
JACOBS SOLUTIONS INC. (J)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_____________________________
Form 8-K
___________________________
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): March 1, 2021
Jacobs Engineering Group Inc.
(Exact name of Registrant as specified in its charter)
| Delaware | 1-7463 | 95-4081636 | ||
|---|---|---|---|---|
| (State or other jurisdiction of incorporation or organization) | (SEC File No.) | (IRS Employer<br><br>identification number) | ||
| 1999 Bryan Street | Suite 1200 | Dallas | Texas | 75201 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number (including area code): (214) 583-8500
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
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| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | |
|---|---|---|---|
| Common Stock | $1 par value | J | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| ☐ | Emerging growth company |
|---|---|
| ☐ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
| --- | --- |
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
| --- | --- |
On March 2, 2021, Jacobs Engineering Group Inc. (the “Company”) completed the previously announced strategic investment in PA Consulting Group Limited (the “Transaction”), a company incorporated in England and Wales (“PA”), pursuant to an Implementation Deed (the “Implementation Deed”), dated November 27, 2020, among the Company, Jacobs Consulting Solutions Limited, a company incorporated in England and Wales and a direct subsidiary of the Company (the “Purchaser”), PA, CEP IV Garden S.A.R.L, a company incorporated under the Grand Duchy of Luxembourg, and the Managers (as defined in the Implementation Deed). Under the terms of the Implementation Deed, the Transaction was implemented by means of a scheme of arrangement to be undertaken by PA under Part 26 of the UK Companies Act 2006 (the “Scheme”). The Scheme involved an application by PA to the High Court of Justice in England and Wales to sanction the Scheme.
Pursuant to the Implementation Deed and the Scheme, the Purchaser acquired 100% of PA’s share capital in the form of preferred and common equity in consideration and certain loan notes for an aggregate amount of £1,842,757,440.46. Part of such consideration was satisfied by the allotment and issue of preferred and common equity in the Purchaser to certain shareholders of PA. The equity issued to certain shareholders of PA represents 35% of the issued share capital of the Purchaser. Holders of preferred equity capital in the Purchaser will receive a 12% coupon accrual compounded annually. An equity incentive pool of 25% of the common equity of the Purchaser has been made available for issuance to current and future employees of PA at fair market value. Pursuant to the terms of the Implementation Deed, the Purchaser acquired certain loan notes issued by Garden Midco 1 Limited (a member of PA's group) in consideration for £266,817,502.40 (such amount included in the aggregate £1,842,757,440.46 consideration amount).
The Implementation Deed was filed as Exhibit 2.1 to the Current Report on Form 8-K filed by Jacobs on November 27, 2020 and is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.<br><br>Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year |
|---|
As previously disclosed, (i) on December 16, 2020, the Company entered into a First Amendment to Second Amended and Restated Credit Agreement (the “Revolver Amendment”) among the Company, the designated borrowers specified therein, the lenders party thereto and Bank of America, N.A., as administrative agent, which Revolver Amendment amends the Second Amended and Restated Credit Agreement, dated as of March 27, 2019 (the “Existing Revolving Facility” and as amended by the Revolver Amendment, the “Revolving Facility”), and provides for, among other things, administrative changes allowing a one-time “limited conditionality” draw under the Revolving Facility in connection with the consummation of the Transaction and (ii) on January 20, 2021, the Company entered into a delayed draw term loan facility (the “Delayed Draw Term Loan Agreement”) with the lenders party thereto and Bank of America, N.A., as administrative agent, under which the Company may borrow term loans in connection with the consummation of the Transaction. The Revolver Amendment has been previously filed with, and is described in, the Company’s Current Report on Form 8-K dated December 18, 2020, the Existing Revolving Facility has been previously filed with, and is described in, the Company’s Current Report on Form 8-K dated March 27, 2019, and the Delayed Draw Term Loan Agreement has been previously filed with, and is described in, the Company’s Current Report on Form 8-K dated January 20, 2021.
On March 1, 2021, the Company borrowed (i) $930,000,000 of revolving loans under the Revolving Facility and (ii) £650,000,000 and $200,000,000 of term loans under the Delayed Draw Term Loan Agreement, in order to finance, together with cash on hand of the Company, the cash component of the consideration for the Transaction, the repayment of certain outstanding indebtedness of PA, an intercompany lending facility for PA and certain of its subsidiaries, and other related transaction fees and expenses.
| Item 7.01 | Regulation FD. |
|---|
On March 3, 2021, the Company issued a press release announcing the completion of the Transaction. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information disclosed in this Item 7.01, including Exhibit 99.1 hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. Furthermore, the information disclosed in this Item 7.01, including Exhibit 99.1 hereto, shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.
| Item 9.01 | Financial Statements and Exhibits. |
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(d)Exhibits:
| 99.1 | Press Release, dated March 3, 2021 |
|---|---|
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document |
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: March 3, 2021
| JACOBS ENGINEERING GROUP INC. | |
|---|---|
| By: | /s/ Kevin C. Berryman |
| Kevin C. Berryman | |
| President | |
| and Chief Financial Officer | |
| (Principal Financial Officer) |
Document
Exhibit 99.1
| 1999 Bryan Street, Suite 1200 |
|---|
| Dallas, Texas 75201 |
| 1.214.583.8500 |
Press Release
| FOR IMMEDIATE RELEASE | March 3, 2021 |
|---|
Jacobs Takes Majority Stake in PA Consulting to Form Strategic Partnership
Further enables shift to a global leader in high-value solutions
Continue to expect $0.52 to $0.57 of adjusted EPS accretion from PA for fiscal 2022
DALLAS – Accelerating its growth strategy as a leading technology-enabled solutions provider, Jacobs (NYSE:J) has taken a 65% stake in PA Consulting, a leading innovation and transformation consulting firm. The investment places an enterprise value of PA at £1.825 billion ($2.5 billion1) and transforms PA into a global player at scale. The remaining 35% stake is held by PA employees.
“This strategic partnership accelerates our strategy to become a leader in bringing greater innovation and creativity to respond to current-day challenges such as climate change, cyber, urbanization and the ongoing healthcare crisis,” said Jacobs Chair and CEO Steve Demetriou. “PA has delivered strong growth over the last five years and together our organizations will set a new industry benchmark in differentiated solutions that deliver superior end-to-end value for Jacobs and PA clients, employees and investors.”
Paving the way for closing, the transaction was overwhelmingly approved by PA employees and shareholders, with 99.9% voting in favor of the partnership. Voluntary election for management rollover was fully subscribed, indicating the enthusiasm and commitment of PA partners and employees about the growth opportunity.
CEO of PA Consulting Ken Toombs said: “The completion of Jacobs’ investment marks the beginning of an exciting new chapter for PA. Jacobs’ culture, values and client base are closely aligned to our own, making them a natural marketplace partner. Their complementary capabilities will further strengthen our ability to deliver innovative solutions for our clients. The overwhelming support of PA shareholders for the transaction is a testament to the great potential we all see in this partnership.”
The partnership respects and preserves PA’s independence and heritage, and advances opportunities for both Jacobs and PA employees through collaboration and co-creation of innovative solutions for clients. Joint go-to-market teams are aimed at high growth sectors of Health and Life Sciences, Public Services, Consumer and Manufacturing, and Defense and Security to help address some of the world’s most critical challenges.
PA’s reputation for tackling these challenges is evidenced by their work in:
•improving people’s lives, by supporting the U.K. Government with their ventilator program, and supporting the development of innovative cell and gene therapies;
•tackling sustainability, creating practical solutions to replacing single-use plastics, and supporting the transition to clean energy;
•protecting the U.K. by supporting the U.K. Ministry of Defence in its innovation efforts, and creating a regulatory strategy for commercial space travel; and
•reinventing infrastructure, by developing proprietary digital technology like iPredict to predict energy utility asset failures as well as working with Virgin Hyperloop One on the first new mode of transport for more than a century.
Jacobs President and Chief Operating Officer Bob Pragada commented: “We are excited about the leading-edge work that PA does, as well as their performance for 2020, which exceeded expectations. Their pipeline of strategic and technical consulting work continues to grow, and looking further into fiscal 2021 and beyond, the Jacobs-PA partnership presents a compelling organic growth opportunity driven by technology-enabled solutions in response to industry disruption and client needs.”
Jacobs completed the deal on March 2, 2021, in accordance with the terms announced on November 30, 2020. The transaction was funded through a combination of cash on hand and existing debt facilities.
Advisors
Rothschild & Co. served as exclusive financial advisor and Fried, Frank, Harris, Shriver & Jacobson LLP served as legal counsel to Jacobs.
J.P. Morgan and HSBC served as financial advisors to The Carlyle Group and PA. Linklaters served as legal counsel to The Carlyle Group and PA, and Dickson Minto served as legal counsel to the management of PA.
Note: 1 The enterprise value £1.825 billion ($2.5 billion) is based off foreign exchange rate of 1.3951 USD per GBP.
About Jacobs
At Jacobs, we're challenging today to reinvent tomorrow by solving the world's most critical problems for thriving cities, resilient environments, mission-critical outcomes, operational advancement, scientific discovery and cutting-edge manufacturing, turning abstract ideas into realities that transform the world for good. With $14 billion in revenue and a talent force of approximately 55,000, Jacobs provides a full spectrum of professional services including consulting, technical, scientific and project delivery for the government and private sector. Visit jacobs.com and connect with Jacobs on Facebook, Instagram, LinkedIn and Twitter.
About PA Consulting
We believe in the power of ingenuity to build a positive human future in a technology-driven world. As strategies, technologies and innovation collide, we create opportunity from complexity. Our diverse teams of experts combine innovative thinking and breakthrough use of technologies to progress further, faster. Our clients adapt and transform, and together we achieve enduring results. An innovation and transformation consultancy, we are over 3,200 specialists in defense and security, consumer and manufacturing, government, health and life sciences, transport, energy and utilities, and financial services. Our people are strategists, innovators, designers, consultants, digital experts, scientists, engineers and technologists. We operate globally from offices across the U.K., U.S., Europe, and the Nordics. Discover more at paconsulting.com and connect with PA on LinkedIn and Twitter.
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Forward-Looking Statements
Certain statements contained in this press release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Statements made in this release that are not based on historical fact are forward-looking statements, including statements regarding the anticipated benefits of the strategic partnership between the company and PA Consulting. We base these forward-looking statements on management's current estimates and expectations as well as currently available competitive, financial and economic data. Forward-looking statements, however, are inherently uncertain. There are a variety of factors that could cause business results to differ materially from our forward-looking statements, including, but not limited to, the impact of the COVID-19 pandemic and the related reaction of governments on global and regional market conditions and the company's business. For a description of some additional factors that may occur that could cause actual results to differ from our forward-looking statements, see our Annual Report on Form 10-K for the year ended October 2, 2020, and in particular the discussions contained under Item 1 - Business; Item 1A - Risk Factors; Item 3 - Legal Proceedings; and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, and our Quarterly Report on Form 10-Q for the quarter ended January 1, 2021, and in particular the discussions contained under Part I, Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations; Part II, Item 1 - Legal Proceedings; and Part II, Item 1A - Risk Factors, as well as the company's other filings with the Securities and Exchange Commission. The company is not under any duty to update any of the forward-looking statements after the date of this press release to conform to actual results, except as required by applicable law.
Non-GAAP Financial Measures
In this press release, the company has included a certain non-GAAP financial measure as defined in Regulation G promulgated under the Securities Exchange Act of 1934, as amended. The non-GAAP financial measure included in this press release is the expected accretion of the transaction to Jacobs' adjusted earnings per share (EPS) for fiscal 2022. Reconciliation of this financial measure to the most directly comparable GAAP measure is not available without unreasonable efforts because Jacobs cannot predict with sufficient certainty all the components required to provide such reconciliation, including with respect to the costs and charges relating to transaction related expenses to be incurred in fiscal 2022 and subsequent periods. Jacobs provides non-GAAP financial measures to supplement U.S. GAAP measures, as they provide additional insight into Jacobs' financial results. However, non-GAAP measures have limitations as analytical tools and should not be considered in isolation and are not in accordance, or a substitute for, U.S. GAAP. In addition, other companies may define non-GAAP measures differently, which limits the ability of investors to compare non-GAAP measures of Jacobs to those used by peer companies.
For additional information contact:
Investors: Jonathan Doros, 817-239-3457 jonathan.doros@jacobs.com
Media: Marietta Hannigan, 214-920-8035 marietta.hannigan@jacobs.com