November 16, 2007 in Business

WGI buyout approved

Associated Press The Spokesman-Review
 

BOISE – Washington Group International shareholders approved a $3.2 billion buyout Thursday by rival URS Corp. to create the nation’s biggest engineering and construction company.

The cash-and-stock deal was approved by 53 percent of Washington Group’s outstanding shareholders during a special meeting in Boise, ending weeks of speculation that many shareholders believed Washington Group’s offer was too low.

URS shareholders approved the deal in a separate meeting Thursday in New York.

WGI Chief Executive Officer Steve Hanks said the takeover by URS would create a company of 55,000 employees with more than $8 billion in annual revenue and unrivaled potential to win government and private contracts globally.

“We will have the largest human resource footprint in the industry,” Hanks said. “This is a great opportunity to expand and grow this company. This comes at a time when demand for our services is at an all-time high.”

Martin Koffel, URS chairman and CEO, says the merger creates a company capable of serving every phase of a project, from initial planning, engineering, construction, operations and management.

“We believe the company is unrivaled in terms of its professional talent and the opportunities we are able to offer our employees as part of a larger, more dynamic company,” Koffel said in a statement.

It took some time and deal sweetening to win over the majority of Washington Group shareholders. The resistance forced Washington Group to postpone an Oct. 30 shareholder meeting and give management more time to lobby shareholders.

After some haggling last week, San Francisco-based URS agreed to throw in more of its stock to boost the proposed purchase price by about $200 million.

URS and Washington Group valued the sweetened bid at $97.89 per share, 8.5 percent better than the original offer of $90.20 per share. Shareholders representing more than 29 million outstanding shares were eligible to take part in voting Thursday.

Under terms of the deal, Washington Group shareholders can elect to receive cash, stock, or cash and stock for their shares. Based on the five trading day volume of URS common stock of $57.01 per share, Washington Group shareholders can elect to receive $95.12 in cash, 1.67 shares of URS common stock or $43.80 in cash and 0.9 shares of URS stock, according to URS estimates.

Executives say the combined company will be more diverse, nimble during slowdowns, and better positioned to compete for contracts for roads, bridges, power plants, oil and gas projects and alternative energy ventures.

Hanks said the combination coincides with a push by governments and private industry on new projects and infrastructure. He said global energy companies alone are poised to invest $2 trillion over the next decade in oil and gas development. Governments and utilities are investing millions studying nuclear energy and plant designs, he said.

Hanks says WGI’s headquarters in Boise will be made smaller and that some departments could be folded into operations elsewhere.

Washington Group shares rose $6.99, or 7.6 percent, to $99 Thursday. URS shares rose $5.95, or 10.7 percent, to close at $61.70.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email