Why Jacobs Is Buying A Majority Stake In PA Consulting

By Dan Anderson ● December 2, 2020
  • Jacobs Engineering Group Inc (NYSE: J) and PA Consulting — a leading innovation and transformation consulting firm — announced recently that they will form a strategic partnership in which Jacobs will acquire a 65% stake in PA

Jacobs Engineering Group Inc (NYSE: J) and PA Consulting — a leading innovation and transformation consulting firm — announced recently that they will form a strategic partnership in which Jacobs will acquire a 65% stake in PA. This investment places an enterprise value of PA at £1.825 billion. The remaining 35% stake will be held by PA employees, following the exit of existing majority stakeholder The Carlyle Group.

PA has delivered strong growth over the last 5 years, which resulted in EBITDA more than doubling over the period and achieving compound annual revenue growth of 12% since 2016. And from its inception in 1943, PA has worked with a wide range of clients – ranging from start-ups with a promising idea to change the world to some of the most important global companies and organizations – to find innovative ways to be faster and nimbler and to create the services and products that grow their businesses, and delight customers and the global community.

PA has developed world-leading innovations with Virgin Hyperloop to reinvent transport with Ori Biotech to revolutionize cell and gene therapy manufacturing and with public utilities leveraging iPredict, which is the world’s first AI and Machine Learning system to predict failures in critical underground electricity distribution assets.

The companies pointed out that the partnership will: 1.) Sets a new industry benchmark in differentiated solutions for delivering end-to-end value for Jacobs and PA clients, employees, and investors 2.) Transform PA to a global player at scale and accelerate their growth plan through access to Jacobs client base and global platform 3.) Advance opportunities for both Jacobs and PA employees through collaboration and co-creation of innovative solutions 4.) Provide timely positioning of ingenious solutions-based platforms for enhanced agility in response to current-day challenges like climate change, decarbonization, urbanization, and the ongoing healthcare crisis and 5.) Target joint go-to-market teams toward initial high growth sectors of Health and Life Sciences, Public Services, Consumer and Manufacturing, and Defense and Security to capitalize on immediate revenue synergy opportunities.

Jacobs is expecting the deal to close by the end of its fiscal 2021 second quarter.

KEY QUOTES:

“We are on the cusp of the next digital revolution as advances across 5G-driven compute power, robotics, autonomous technology, machine learning automation and geospatial technology converge to provide solutions to many of the world’s most complex challenges, including disruption to traditional business models. Our partnership with PA forms a unique offering in the market that combines strategic front-end consulting and deep domain knowledge across key sectors with next generation science and technology expertise. Over the last several years we have transformed Jacobs to a leading technology enabled solutions provider built on a foundation of strong core values with an inclusive and diverse culture. This strategic partnership is an intentional move in accelerating our strategy to lead the market as a company like no other.”

“The partnership respects and preserves PA’s heritage and independence under Ken Toombs’ leadership – while creating superior value for Jacobs shareholders and significant opportunities for our clients and employees.”

— Jacobs Chair and CEO Steve Demetriou

“We see Jacobs as the ideal partner for PA, leveraging their client relationship networks and global platform to position us for the next phase of growth. Their purpose to create a connected sustainable world and commitment to an inclusive future for all aligns with our own purpose – Bringing Ingenuity to Life – and our commitment to innovate towards a positive human future. We look forward to continuing to deliver ingenious solutions for our clients, supported by Jacobs’ investment and our partnership.”

— PA Consulting CEO Ken Toombs