Jacobs Engineering Group Inc., Pasadena, Calif., and Stone & Webster Inc., Boston, have signed a letter of intent for Jacobs to acquire Stone & Webster's assets and contracts. Terms of the agreement call for Jacobs to pay $150 million in cash and stock and will assume specified liabilities related to Stone & Webster's ongoing business. Jacobs also has agreed to advance up to $50 million in working capital funds to Stone & Webster under a secured revolving credit agreement.
The news comes after Stone & Webster revealed it will file petition for reorganization under Chapter 11 of the US Bankruptcy Code.
Meanwhile, Cauley & Geller LLP, a Boca Raton, Fla.-based law firm, on Tuesday said it filed a class-action lawsuit in the US District Court of Massachusetts on behalf of investors who purchased Stone & Webster's common stock between Apr. 27, 1999, and Apr. 28, 2000. The lawsuit alleges that Stone & Webster and some of its officers and directors violated securities laws by providing false and misleading information about Stone & Webster's financial condition. Because of that information, the lawsuit alleges, the company's stock traded at artificially inflated prices from April 1999 to April 2000.
Jacobs Pres. and CEO Noel Watson says the purchase continues Jacobs' program of diversification by giving it entry into the growing power market. "We will couple our relationship with Stone & Webster's client base to create one of the largest and most diversified professional technical service firms in the world."
Stone & Webster has about 5,000 employees in North America and Europe. Jacobs employs 18,000. It also has operations India and Southeast Asia as well as North America and Europe. Stone & Webster and Jacobs had annual revenues as of Mar. 31 of $1.3 billion and $3.2 billion, respectively.
The firms serve different markets in the locations they share, Watson said. By combining the operations, the companies will serve a "wider, deeper client and industrial base." Stone & Webster's consulting arm broadens Jacobs's base in that "fast-growing" arena, he added, and Stone & Webster's ethylene technology business will expand Jacobs' capabilities in dealing with its chemical business.
