Dallas-based Jacobs Engineering Group has announced that it would acquire KeyW Holding Corp. for $815 million. Under the terms that were reported by the two companies, Jacobs will pay $11.25 per share in cash for the cybersecurity firm. That offer was a 43% premium to the closing price of KeyW’s stock of $7.86 per share on April 18.
Upon approval from both companies’ boards KeyW, which provides intelligence, cyber, mission and IT analytics and operates in the intelligence and national security sector, will become a wholly owned indirect subsidiary of Jacobs.
The Dallas-based professionals firm has largely focused on an aerospace, technology and nuclear transformation strategy, so while each company had its own ties to government contracts by acquiring KeyWJacobs will expand its offerings in those other sectors.
“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 Steve Demetriou, Jacobs’ chair and CEO via a statement. “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 multibillion-dollar space opportunity delivering next generation intelligence and analytics solutions.”
As a result of this merger Jacobs will also increase its role in the ISR (Intelligence, Surveillance and Reconnaissance) sector, which has been projected to reach more than $46 billion by 2024. The United States Air Force alone is anticipated to invest upwards of $14 billion next year in its space programs as it has put a priority for space as the next crucial domain for enhanced national security.
KeyW has long been a significant force in ISR, and its capabilities in this area have included rapid development of highly specialized sensor-based products, which the company has customized and deployed to support air, land, sea and space missions. From this merger KeyW will be able to help position Jacobs to expand into the rapidly evolving space-based remote sensing business.
“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 we welcome KeyW’s talented employees to the Jacobs team.”
The short term winners will likely be KeyW’s shareholders.
“Cultural fit and exceptional shareholder values were of paramount importance in the criteria for partnership in KeyW’s next chapter,” said Bill Weber, president and CEO of KeyW. “We believe that joining with Jacobs will enable KeyW’s talented team to deliver even more innovative technologies and capabilities to customers.”
At the end of last year KeyW had 1,790 employees and the company reported revenue of $506.9 million and a loss of $22.3 million for 2018.
The companies expect the merger to close by August 31, subject to customary conditions and regulatory approval.
