AECOM Technology Corporation (ACM) recently revealed its plans to offer senior notes worth $1.6 billion in aggregate principal amount, scheduled for maturity in 2022 and 2024. The news, coming on Sep 10, did not provide much momentum to the stock which has gained only about 0.8% so far.
The company plans to use the proceeds from this offering to finance its present debts as well as those pertaining to the previously announced acquisition of URS Corporation (URS).
In the recently reported third-quarter results, the company’s long-term debt stood at $977.0 million. This apart, AECOM had an additional burden related to the URS acquisition. The total enterprise value of the transaction is expected to reach over $6 billion, including the debt held by URS.
Further, post-merger, the company’s pro-forma leverage ratio will likely increase to 4.4x. However, the company had earlier announced its intention of lowering the leverage ratio to 2.0x by 2017.
In July, AECOM had announced its decision to acquire the San Francisco-based URS Corp. for about $4 billion or $56.31 per URS share. Slated to close in Oct 2014, the deal is likely to make AECOM one of the largest engineering and construction companies in terms of revenues. The combined entity will be headquartered in Los Angeles, with a key operational presence in San Francisco where URS is presently based.
Currently, AECOM has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Willdan Group Inc. (WLDN), VSE Corp. (VSEC) and AO Smith Corp (AOS). While Willdan Group sports a Zacks Rank #1 (Strong Buy), both VSE Corp. and AO Smith carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment