Aecom, targeted by activist investorStarboard Value, is nearing a $2.4 billion deal to sell its management services business to a consortium of private equity firms includingLindsay Goldberg andAmerican Securities, according to people familiar with the matter.
The transaction could be announced as early as Monday, the people said, asking not to be identified because the matter is private. Aecom had a market capitalization of $5.9 billion as of Friday’s close.
The Los Angeles-based firm, one of the world’s top engineering and design groups,announced plans to spin off its management services unit in June. It argued at the time that the move would create a leading government services company for its clients, including the U.S. Departments of Defense and Energy, by leveraging its expertise in areas such as intelligence, cyber-security and information technology.
Representatives at Aecom and American Securities declined to comment, while an official at Lindsay Goldberg wasn’t immediately available.
In fiscal 2018, the management services segment generated revenue of $3.7 billion, with operating income of $200 million and adjusted operating income of $239 million.
The plan to spin off the management services division was criticized by Starboard, the activist fund run by Jeff Smith, who said in aJune letter that the plan didn’t go far enough. Starboard said it believed in addition to exploring an outright sale, Aecom could also offload its construction services business. There is also room for operational improvements in its design and consulting services business, Starboard wrote.
The company’s services include consulting, planning, architecture, engineering and construction management, among other areas, according to its website. The company said it has a $54 billion backlog of orders and had $20 billion worth of revenue in 2018.
— With assistance by Kiel Porter
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