Jacobs Engineering Agrees to Buy Sverdrup

Jacobs Engineering Group Inc. of Pasadena on Wednesday agreed to buy closely held engineering firm Sverdrup of St. Louis for about $200 million in cash.

The combination would form the sixth-largest construction and engineering company in the U.S. The agreement must be approved by Sverdrup shareholders.

Jacobs said that Sverdrup shareholders could realize an additional $30 million during the next three years if the price of Jacobs’ shares rise above certain thresholds, which were not revealed.

Jacobs shares rose 19 cents to close at $37.25 on the New York Stock Exchange. The agreement was announced after the close of U.S. trading.

The price of Jacobs’ stock has jumped 50% in the last year, and 25% since October, as speculation mounted about a possible merger.

Jacobs had sales of $2.1 billion in fiscal 1998 and has 18,000 employees worldwide. Sverdrup said it has 5,600 employees and 1998 sales of about $1 billion.

Last month, the two companies said that they were in talks and that a merger would give the combined companies the “critical mass” needed to offer clients a broader range of services. Jacobs, with workers in 39 locations worldwide, is a leader among 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.

The merger would also lift Jacobs’ annual revenue to nearly $3 billion, and give it more than 23,000 employees. Jacobs’ overall market value is about $950 million.

In a statement, the companies said that a combination would create a full-service firm that would be able to handle all aspects of major projects, from design to construction to the operation of projects and facilities.

The transaction is expected to close in January.