In a deal announced Monday, Jacobs will acquire KeyW for $11.25 per share in cash. The transaction is valued at $815M, including $272M of KeyW debt, and involves two companies with interests in high level government cybersecurity contracts.
Jacobs, an engineering company based in Dallas, Texas, continues to acquire businesses in the GovCon sector focused on the cybersecurity market. Jacobs reported $15B in revenue during 2018. The merger will enable the company to expand its efforts in the intelligence, surveillance and reconnaissance sector which is projected to exceed $46B by 2024, according to a press statement from the company.
KeyW, based in Hanover, Maryland, is a leading national security provider of advanced engineering and technology solutions for the intelligence, cyber and counterterrorism communities. It collects intelligence data for government agencies. Founded in 2008, it has an estimated 1,800 employees. Its reported revenue for 2018 was $509M. Leaders from both companies explained the significance of the deal.
“As KeyW has steadily created growth and increasing profitability, we’ve considered how best to deploy capital to continue to support that growth. Plugging into Jacobs now – at this point in our maturity – makes so much sense for our customer, our employees, and our shareholders,” said Bill Weber, president and CEO of KeyW. “We’ve always known that of particularly importance to KeyW – and to our customers – is the culture of any potential acquirer. In Jacob Engineering, we found an organization that values their people and leverages innovation on the same level that KeyW always has. This is a great fit,” he added.
More than 75 percent of KeyW employees hold high level security level clearances. The deal increases the number of Jacobs employees with top secret clearance or higher by 50 percent with opportunities to expand business with the intelligence community.
“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, chair and CEO of Jacobs. “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 multi-billion-dollar space opportunity delivering next generation intelligence and analytics solutions.
Jacobs identified more than $100M of potential revenue within the federal customer base, both in current contract vehicles and from opportunities in their respective bid pipelines. It also sees an opportunity to cross-sell KeyW’s ISR and cyber capabilities in Jacobs’ buildings, infrastructure and advanced facilities business.