Mr. Lingard added, “Having access to URS’ pool of talented and experienced construction managers will allow Flint to oversee more projects simultaneously and drive revenue growth. Flint’s employees should also benefit from and enjoy more opportunities to work on a wider range of complex projects in both Canada and the United States. We look forward to working with our URS colleagues to achieve the exciting potential of the combination.”
H. Thomas Hicks, Chief Financial Officer of URS, said, “We expect this transaction will build significant long-term value for our stockholders. Flint offers a diversified, full cycle of services, has limited exposure to fixed price contracts and derives its earnings entirely from operations in the stable North American region. Assuming a second quarter close, we expect to achieve pre-tax cost synergies of US$10-$15 million in 2012, with additional savings expected in the following years as we benefit from economies of scale. We expect the transaction to be accretive to URS’ 2012 EPS between US$0.20 and US$0.30 per share, which reflects expected acquisition related costs, estimated amortization of intangible assets and the estimated cost synergies discussed above.”
URS has financing in place to complete the acquisition under its existing credit facility and a financing commitment for a new bridge facility. Permanent financing is expected to consist of borrowings under URS’ existing credit facility and new debt. Said Mr. Hicks, “URS intends, as in past acquisitions, to use its strong cash flows to reduce debt quickly, while retaining the flexibility to continue to invest in the business and, when debt levels have been reduced, pursue additional growth opportunities.”
URS Fiscal 2012 Outlook
On a standalone basis, URS expects that its fiscal 2012 revenues will be between $9.9 billion and $10.1 billion, net income will be between $292 and $300 million and EPS will be between $3.95 and $4.05. URS will provide full details about its financial results for 2011, and expectations for 2012, on its previously announced fourth quarter and full year 2011 earnings conference call on Monday, February 27, 2012.
The acquisition will be implemented through a Plan of Arrangement under Canadian law and is subject to a number of customary conditions for a transaction of this nature including, but not limited to, the approval of at least 66 and 2/3% of the votes cast in person or by proxy by Flint shareholders and option holders at a special meeting of Flint's security holders, as well as court and relevant regulatory approvals. The terms and conditions of the arrangement and additional details of the transaction will be summarized in Flint’s management information circular, which is expected to be filed and mailed to Flint’s shareholders in early March 2012. A copy of the arrangement agreement will be filed on Flint’s SEDAR profile and will be available for viewing at www.sedar.com. The special meeting of Flint security holders is scheduled to be held on April 3, 2012, with closing expected to occur in the second quarter of 2012.
The arrangement agreement is subject to customary non-solicit provisions and Flint’s right to consider and accept superior proposals. In the event of a superior proposal, URS will have a five-business-day right to match the superior proposal. If the arrangement is not completed as a result of a superior proposal, or for other certain specified circumstances, a termination fee equal to C$42 million will be paid by Flint to URS.