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Jacobs Says It's in Talks to Purchase Sverdrup

Acquisitions: Merger would position new firm to become the premier engineering, architectural, construction and scientific consulting firm.

November 06, 1998|JAMES F. PELTZ | TIMES STAFF WRITER

Jacobs Engineering Group Inc. in Pasadena said Thursday it is in talks to purchase another large-scale engineering and construction company, privately held Sverdrup Corp. of St. Louis.

The proposed merger, aimed at giving the combined companies the "critical mass" needed to offer clients a broader range of services, would lift Jacobs' annual revenue to nearly $3 billion, and give it more than 23,000 employees.

Potential terms of a deal weren't disclosed.

The companies decided to make the announcement after financial markets closed Thursday because rumors of their negotiations were becoming widespread, said John Prosser Jr., Jacobs' senior vice president for finance and administration.

Indeed, the price of Jacobs' stock has jumped 18% in the last month as speculation mounted. The stock closed Thursday at $33 a share, unchanged on the day, in composite trading on the New York Stock Exchange. Jacobs' overall market value is about $844 million.

With the merger, the companies "would be well-positioned to become the premier engineering, architectural, construction and scientific consulting firm in the world in the next few years," Noel G. Watson, Jacobs' chief executive, said in a statement.

His counterpart at Sverdrup, Richard E. Beumer, said the deal also would give them the critical mass "to offer clients great depth and breadth in technical services."

Jacobs, with 18,000 workers in 39 locations worldwide, is among the leading companies that design and build complex, large-scale projects, such as factories, petrochemical plants, utility projects and the like. It also handles major contamination-cleanup jobs, and its revenue totaled $1.8 billion in its fiscal year ended Sept. 30, 1997.

In July, for instance, Jacobs was hired to oversee construction of the new County-USC Medical Center. The company also has a joint venture with another major engineering concern, Bechtel, overseeing toxic-cleanup jobs at certain Energy Department laboratories.

Jacobs was founded half a century ago by its 82-year-old chairman, Joseph Jacobs. The son of Lebanese immigrants, he came West in the 1940s with an engineering degree from Brooklyn Polytechnic University.

His firm flourished in postwar Southern California, building chemical plants and oil refineries. And it prospered during the oil boom of the 1970s, with major projects in the Middle East and elsewhere.

Jacobs then went through some tough times as oil prices fell back, but it has been expanding again in recent years, partly through a series of acquisitions.

Sverdrup--with about $1 billion in annual revenue--was started in 1928 by a Norwegian immigrant, the late Leif J. "Jack" Sverdrup, and engineering professor John I. Parcel.

The company began as a bridge specialist, and today is also known for its civil infrastructure, transportation and high-technology projects, including airports, schools, industrial plants and waste water systems.

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