John Wood Group PLC has agreed to sell its nuclear business to a Jacobs Engineering Group Inc. subsidiary for £250 million, or about $305 million, in a bid to reduce debt and achieve its target leverage policy.
The cash consideration represents a multiple of approximately 12.4x based on 2018 EBITDA of £20.2 million, or $26.3 million, according to an Aug. 20 news release.
"Although our nuclear business is a strong U.K. player and has performed well, we see better opportunities to develop clear global leadership positions across other parts of our business," said John Wood Group CFO David Kemp.
In a separate statement, Jacobs said it expects the deal to be accretive to adjusted earnings in the range of 10 cents to 12 cents in the first year of ownership of the nuclear business.
"This acquisition further strengthens Jacobs' position in highly profitable and complementary sectors within nuclear and defense, enhancing our recognized program management skills with deep, technical expertise," said Jacobs Chair and CEO Steve Demetriou.
The deal is expected to close before the end of the first quarter of 2020, subject to antitrust clearance by the U.K. Competition and Markets Authority. Jacobs will have to pay John Wood Group £7.5 million, or over $9 million, if the deal fails to secure antitrust clearance because of certain circumstances.
John Wood Group has tapped PricewaterhouseCoopers as financial adviser and Slaughter and May as legal counsel. Jacobs has hired Rothschild & Co. as sole financial adviser and Paul Hastings LLP as legal counsel.
