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AECOM Agrees to Sell Civil Construction Unit

Friday, December 18, 2020

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Last Thursday (Dec. 10), infrastructure consulting firm AECOM (Los Angeles) announced in a press release that it would be selling its civil construction business––including Shimmick Construction––to Oroco Capital, an infrastructure investor based out of Bethesda, Maryland.

AECOM’s civil construction business performs heavy civil, transportation, buildings, water, energy and environment projects for private and public clients and is reported to be the third largest constractor in the United States by revenue.

AECOM is a Fortune 500 firm and its Professional Services business had revenue of $13.2 billion in fiscal year 2020. In connection with the transaction, Wachtell, Lipton, Rosen & Katz served as legal advisor to AECOM, while DBO Partners LLC served as its financial advisor.

Moving On

The recent announcement isn’t the first time this year that AECOM sold off one of its fixed-price construction operations. Back in October, the company closed the sale of its power construction business to affiliates of CriticalPoint Capital, LLC.

Raysonho @ Open Grid Scheduler / Grid Engine, CC0, via Wikimedia Commons

Last Thursday (Dec. 10), infrastructure consulting firm AECOM (Los Angeles) announced in a press release that it would be selling its civil construction business––including Shimmick Construction––to Oroco Capital, an infrastructure investor based out of Bethesda, Maryland.

“The sale of the Power construction business marks another milestone in the successful execution of our transformation into a higher-margin, lower-risk Professional Services business,” said Troy Rudd, AECOM’s Chief Executive Officer at the time. “We have built significant momentum in our business and continue to advance efforts to align our organization around a global structure that fosters a culture of collaboration, better connects our expertise and focuses on our best growth opportunities.”

And now, although AECOM bought Shimmick Construction to be featured its in civil construction portfolio for $175 million in 2017, the company is now selling off this additional business as well. The move, investors report, is not a surprise.

"Investors have been expecting this for some time and therefore the announcement is more of a verification of the plan than anything new," said Senior Research Analyst with Baird Equity Research's Industrial Services division, Andrew Wittmann. "The company has been making a concerted effort for a while now exit all of its fixed-price construction operations, of which its civil construction arm is the largest part."

Along with its recent business sales, AECOM has also made some changes to its board of directors, appointing seven of its 11 board members. Those appointments include:

  • The nominations of Diane C. Creel and Sander van’t Noordende as new independent directors for election at the company’s 2021 annual meeting in February;
  • Lydia H. Kennard, whose appointment was previously announced, joined the board effective Dec. 14;
  • Robert J. Routs will retire and not stand for re-election; and
  • As previously disclosed, Steven Kandarian will not stand for re-election.

The changes reportedly settle the firm’s issues with activist investor Starboard, who has a 4% stake in the company. Through a disagreement involving the company’s CEO search process, lack of notification and the appointment of Troy Rudd as CEO in June, Starboard board member Peter A. Feld resigned.

On the sale of the civil construction business, Rudd said, ““Today’s announcement of the sale of our Civil construction business, together with the sale of our Power construction business in October, represents a significant milestone in advancing our strategy and focusing our efforts on our higher margin and lower-risk Professional Services businesses.

Our outlook is bright as we bring together our company under our Think and Act Globally strategy, which includes transforming how we operate through the digital delivery of our work and focusing on growing our Professional Services businesses.”

The transaction is expected to close in January 2021, pending customary closing conditions. Financial terms have not been disclosed.

   

Tagged categories: AECOM; Asia Pacific; Business management; Business matters; Business operations; Construction; EMEA (Europe, Middle East and Africa); Finance; Latin America; North America; Program/Project Management; Z-Continents

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