URS’ Proposed Acquisition Of Scott Wilson To Expand International Footprint

Analysts at Sterne Agee maintain their "neutral" rating on URS Corp URS. The target price for URS is set to $51. According to Sterne Agee, “URS offered to acquire Scott Wilson Group for ~$242M or £2.10 per share in cash, subject to SWG shareholder and UK regulatory approvals. On an EV/EBITDA basis, the proposed transaction values SWG at 5.0x FY10E EBITDA, is expected to close in 3Q10, and is expected by URS management to be accretive to 2011EPS.” “CH2M Hill, a private competitor, stated shortly after the acquisition announcement its intent to do due diligence on Scott Wilson….. We believe CH2M Hill’s actions likely create a delay and/or blockage of the acquisition and increase the likelihood of URS having to increase its offer price in order to successfully complete the acquisition, despite unanimous SWG board approval at £2.10/share,” the analysts mention. Sterne Agee adds, “If successful, Scott Wilson accelerates URS’ efforts to expand its presence outside of the U.S. (would grow to ~14% of consolidated revenue, vs. 9% currently), adding design and engineering capabilities in the U.K. and Europe as well as in key growth markets such as Asia Pacific and the Middle East (19% of SWG revenue). Aside from geographic diversification, the acquisition would help to enhance URS’s market position in key markets such as high-speed rail, transportation infrastructure, and ports/harbors, where SWG has expertise.” More Analyst Ratings here