URS, Washington Group International amend merger agreement

Sponsored by

•URS increases stock component and gives WNG stockholders right to elect cash, stock or cash and stock; Says offer is "Best and Final"; Stockholder meetings rescheduled for Nov. 15

SAN FRANCISCO & BOISE, ID, Nov. 5, 2007 -- URS Corporation and Washington Group International Inc. today announced that their previously announced definitive merger agreement for the acquisition of Washington Group by URS has been amended to increase the consideration to be received by Washington Group stockholders and to provide them with the ability to elect to receive cash, stock or cash and stock for their shares (subject to proration).

Based on the closing price of URS' common stock on Nov. 2, 2007, the consideration is now valued at approximately $3.2 billion, or $97.89 per Washington Group share, which represents a premium of approximately 8.5% over the initial merger consideration value of $90.20 as of such date. Based on the volume weighted average price of URS' common stock during the five trading days ending on Nov. 2, 2007, the consideration is now valued at approximately $3.2 billion, or approximately $99.00 per Washington Group share, compared with a value of approximately $3.0 billion, or $91.14 per Washington Group share (using the five trading day weighted average), under the terms of the original merger agreement.

Under the terms of the revised merger agreement, which has been unanimously approved by the boards of directors of both companies, Washington Group stockholders can elect to receive all cash, all stock, or a combination of cash and stock (subject to proration) with a consideration value of 0.900 shares of URS common stock plus $43.80 in cash for each Washington Group share.

The proration will be determined based on the volume-weighted average price of URS' common stock during the five trading days ending on the day before the required Washington Group stockholder approval is received. This five trading day period is currently scheduled to end on Nov. 14, 2007. The election procedures are subject to proration to preserve an aggregate per share mix of 0.900 shares of URS common stock plus $43.80 in cash for all outstanding Washington Group shares and options (after giving effect to the options' exercise prices).

Based on the outstanding shares and options of Washington Group as of Sept. 30, 2007, in the aggregate, Washington Group shares and options will be converted into approximately $1.4 billion in cash and approximately 29 million shares of URS common stock. All terms of the original merger agreement not related to the revised merger consideration remain substantially unchanged.

Upon completion of the transaction, Washington Group stockholders would own approximately 35% of the combined company, compared with approximately 32% under the terms of the original merger agreement. Stockholders of record of URS common stock and Washington Group common stock at the close of business on Sept. 21, 2007 will be entitled to vote at the special meetings.

Washington Group also announced that Dennis Washington, Chairman of the Washington Group board of directors, has executed a binding agreement to exercise all of his beneficially owned stock options for 3.224 million shares of Washington Group stock (or approximately 10% of outstanding Washington Group stock) and vote his shares in favor of the revised merger agreement if necessary to achieve the required Washington Group stockholder approval. If it is necessary for Mr. Washington to exercise his options and vote his shares, a new record date and meeting date for the Washington Group special meeting will be set.

Mr. Washington has indicated that he intends to make the necessary Hart-Scott-Rodino Act filing today in order to be able to exercise his options, and has also indicated that if the merger is completed he would elect to receive cash for all of his Washington Group shares (subject to proration).

Martin M. Koffel, Chairman and Chief Executive Officer of URS, said: "The enhancement to the terms of our agreement reflects URS' commitment to the combination with Washington Group and our conviction that the transaction will create significant benefits for the stockholders, customers and employees of both companies. We believe that the recent strong performance of both companies and continued positive outlook for our businesses warrant the increase in our offer. However, URS is a disciplined buyer and these terms represent our best and final offer for Washington Group."

"We are very pleased to present this increased consideration to our stockholders for their vote at our special meeting next week," said Washington Group President and Chief Executive Officer Stephen G. Hanks. "The increased financial terms of our agreement with URS provide even greater value to Washington Group stockholders, as well as a higher level of continued ownership in the combined entity and greater flexibility to choose between cash and stock in exchange for their shares. The combination of Washington Group and URS represents a unique opportunity to create a single-source provider that can offer a full life cycle of planning, engineering, construction, environmental management, and operations and maintenance services. Our board of directors unanimously recommends that Washington Group stockholders vote in favor of the merger agreement."

URS expects the transaction to be slightly dilutive to GAAP earnings per share ("EPS") in 2008, accretive to GAAP EPS in 2009 and beyond, and accretive to its cash EPS in 2008 and beyond, not including revenue synergies expected through the combination.

Consummation of the transaction is subject to the approval of the revised definitive merger agreement by Washington Group stockholders holding a majority of the outstanding shares and the approval of the issuance by URS of shares of common stock in the transaction by URS stockholders holding a majority of the shares voting. URS and Washington Group have rescheduled the companies' special meetings of stockholders for Nov. 15, 2007 to provide investors with additional time to evaluate the revised offer. Supplemental proxy materials will be distributed to URS and Washington Group stockholders prior to the new meeting date.

The special meeting of URS stockholders will be held at 9:00 a.m., local time, at the offices of Cooley Godward Kronish LLP, located at 1114 Avenue of the Americas, New York, New York. The special meeting of Washington Group stockholders will be held at 7:00 a.m., local time, at Washington Group's offices located at 720 Park Boulevard, Boise, Idaho.

URS Outlook for Fiscal 2007
URS also announced that it has revised its outlook for fiscal 2007 based on revenue growth for the nine months of 2007 and the company's continued positive outlook for its markets. URS now expects that 2007 revenues will be approximately $4.85 billion compared to its prior estimate of $4.8 billion. Assuming this revenue expectation is met, URS now expects that 2007 net income will be approximately $134 million compared to its prior estimate of $132 million and now expects that earnings per share will be between $2.50 and $2.55. Previously, URS had expected that EPS would be between $2.45 and $2.50.

URS noted that the guidance provided above does not include the impact of the proposed acquisition of Washington Group. URS will provide additional details regarding its fiscal 2007 guidance on its third quarter earnings call on Thursday, Nov. 8 at 11:00 a.m., Eastern Time. A live webcast will be available at http://www.urscorp.com/investor.

URS Corporation offers a comprehensive range of professional planning and design, systems engineering and technical assistance, program and construction management, and operations and maintenance services for transportation, facilities, environmental, water/wastewater, industrial infrastructure and process, homeland security, installations and logistics, and defense systems.

Washington Group International provides the talent, innovation, and proven performance to deliver integrated engineering, construction, and management solutions for businesses and governments worldwide.


Also see:
-- "URS Acquisition of Washington Group International Clears Hart-Scott-Rodino Review"
-- "URS to Acquire Washington Group International for $2.6 Billion in Cash and Stock"


Sponsored by

Did You Like this Article? Get All the Water Industry News Delivered to Your Inbox or Mailbox

Subscribe to one of our magazines or email newsletters today at no cost and receive the latest information.


Cal Water, Badger Meter partner to launch customized Water Focus Report for customers

In an effort to help customers assess their water use and aid in water conservation efforts during the drought, California Water Service has partnered with Badger Meter to send customers an individualized, monthly Water Focus Report for their properties.

WRF launches new project aimed at developing standard method to validate water audits

The Water Research Foundation recently announced that it has launched a new project aimed at developing a standard method to validate water audits and guidance for utilities and governing agencies in implementing a water audit validation program.

Cooling towers market projected to reach $3.25B by 2020, research finds

According to new research, the global cooling towers market is projected to reach $3.25 billion by 2020, signifying a firm compound annual growth rate of 4.90 percent from 2015 to 2020.

Outlook shows investment in technology critical for U.S. water industry

In the 2015 U.S. Water Industry Outlook published by WeiserMazars LLP, one of the key findings shows that investment in technology is critical for the nation's water industry as it strives to address aging infrastructure, reduce operating costs and comply with regulatory issues.




© 2015. PennWell Corporation. All Rights Reserved. PRIVACY POLICY | TERMS AND CONDITIONS