Boise-based Washington Group International will be sold to rival design and engineering company URS Corp. for about $2.6 billion, the companies announced...
Boise-based Washington Group International will be sold to rival design and engineering company URS Corp. for about $2.6 billion, the companies announced Monday.
The deal will allow San Francisco-based URS to expand its business managing nuclear-power and infrastructure projects.
Washington Group investors will receive $43.80 in cash and 0.772 share of URS stock for each Washington share owned. The offer represents a 14 percent premium to Washington Group’s Friday stock price of $69.97.
URS has 29,500 employees in 20 countries, while Washington Group has 25,000 employees worldwide.
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URS is buying Washington Group to win more business designing and overseeing the construction of power plants and other industrial facilities, and to capitalize on the renewed popularity of nuclear energy. The combined company will be one of the five biggest providers of technical services to the Defense Department.
“We have great respect for the URS team, our businesses complement each other, and we have highly compatible cultures,” said Washington Group Chief Executive Stephen Hanks.
The purchase “positions us strategically in markets we think have very aggressive long-term growth profiles,” said URS Chief Executive Martin Koffel. “That includes power and a very important prospect is nuclear.”
The deal, which is subject to approval by the stockholders of each company and regulators, is expected to close in the second half of this year, the companies said.
The combined company would operate under the name URS Corp. and would have one of the largest teams of nuclear scientists and engineers in the industry and a backlog of projects exceeding $11 billion in more than 50 countries, company officials said.
The two companies said they plan to cut as much as $55 million in costs through their merger. After the transaction, URS is expected to have about $1.5 billion in debt.
URS Chief Executive Koffel will remain in that role. One Washington director will join URS’ board, the companies said.
Washington Group is the former Morrison Knudsen, builder of such public projects as the Hoover Dam and San Francisco’s Bay Bridge. Its chairman, Dennis Washington, bought Morrison Knudsen during a Chapter 11 reorganization in 1996 and later changed the company’s name to Washington Group.
Morrison Knudsen, which got its start building roads and irrigation systems in 1912, had been struggling to avoid bankruptcy since 1995. That’s when a failed plan to make thousands of subway cars left it mired in debt and led to the ouster of its chairman and chief executive, William Agee.
Washington Group filed for Chapter 11 protection in May 2001, blaming its July 2000 purchase of Raytheon’s Engineers & Constructors unit for its financial problems.
Washington Group sued Raytheon in bankruptcy court and Idaho state court, saying it hid the unit’s cost overruns and other liabilities for unfinished projects. The company completed its Chapter 11 reorganization in January 2002.
Information from The Associated Press was included in this report.