Urs Corporation Recommended Cash Offer For Scott -4-

28th Jun 2010 07:00

nominal amount, in aggregate. The maximum nominal amount of the Loan Notes shall be GBP15 million, in aggregate. In the event that Loan Note elections are received in excess of such nominal amount, Universe Bidco shall scale back allocations of the Loan Notes pro rata (rounding down any fractions to the nearest whole number) and any election will only be valid in respect of the scaled back number of Scheme Shares. The obligations of Universe Bidco under the Loan Notes will be backed by either a guarantee from URS Corporation or cash collateralisation by way of a cash escrow account. Further details of the Loan Note Alternative will be set out in the Scheme Document. 4. Background to, and reasons for, the Offer URS's strategic goals are to (i) diversify its business in stable, long-term markets; (ii) enhance its resources and capabilities; and (iii) extend its geographic reach. The Offer for Scott Wilson enables URS to improve its performance against these strategic goals. A combination with Scott Wilson's significant operations in the United Kingdom will enable URS to increase scale in a key overseas territory. It is anticipated that the Enlarged Group will be a top ten engineering company in the United Kingdom by revenue, will be capable of delivering major project initiatives and will have market leading positions in the rail, road, airport and ports infrastructure markets. Outside the United Kingdom and North America, the geographical footprints of Scott Wilson and URS are complementary and the Enlarged Group will have a global presence. Scott Wilson's established engineering business centres in Warsaw, Hong Kong, New Delhi and Dubai complement URS's operations in Frankfurt, Paris, Madrid, Milan, Shanghai, Sydney and Toronto. Together, these locations will provide an enhanced platform for the broader services offered by the Enlarged Group. Importantly, the Offer for Scott Wilson will enable URS to increase its scale of operations in China and India, countries which both have significant growth potential. The Enlarged Group will have increased scale, capabilities and geographical reach enabling it to compete for larger, more complex projects and widen the service offering to its combined global client base. URS believes that the acquisition of Scott Wilson will increase the Enlarged Group's non-US revenues to approximately 14 per cent. of total revenues from URS's current level of approximately 8 per cent. The consolidation of Scott Wilson will also provide opportunities for employees of the Enlarged Group to develop their skills and capabilities through the exchange of knowledge and technology within the Enlarged Group. 5. Background to, and reasons for, recommending the Offer On 7 June 2010, following a movement in Scott Wilson's Share price, the Scott Wilson board announced that it had received approaches with regard to a possible acquisition of the company. Following these approaches, Scott Wilson provided due diligence information to a number of parties, including URS. These approaches followed the decision of the Scott Wilson board earlier in the year to develop a number of strategic relationships around the world in response to a perceived shift in the competitive landscape towards larger and more global players. The board of Scott Wilson considers that the Offer, at a price of 210 pence per Scott Wilson Share in cash, provides a compelling opportunity for Scott Wilson Shareholders to realise a significant premium in cash, and reflects the underlying value of Scott Wilson. Furthermore, the discussions between Scott Wilson and URS have confirmed to the directors of Scott Wilson that the commercial compatibility between the two groups is compelling and that the prospects for Scott Wilson's business, as part of the URS group, would be significantly enhanced. In summary, the directors of Scott Wilson believe that the Offer represents an attractive proposition for all stakeholders in Scott Wilson: · for Scott Wilson Shareholders, the Offer provides a compelling opportunity to realise a significant premium in cash, and in the opinion of the directors of Scott Wilson, the Offer reflects the underlying value of Scott Wilson; · for Scott Wilson's management and employees, the Offer would present significant opportunities to become part of a substantial global leader in integrated engineering, construction and technical services; and · for Scott Wilson's customers, a combination of Scott Wilson and URS would lead to enhanced service and project capabilities, a wider geographical footprint, and the opportunity to share best practice between the businesses. 6. Recommendation The directors of Scott Wilson, who have been so advised by Greenhill and Brewin Dolphin, consider the terms of the Offer to be fair and reasonable. In providing their advice to the directors of Scott Wilson, Greenhill and Brewin Dolphin have each taken into account the commercial assessments of the directors of Scott Wilson. Accordingly, the directors of Scott Wilson intend unanimously to recommend that Scott Wilson Shareholders vote in favour of the Scheme and the resolutions to be proposed at the Court Meeting and the General Meeting, as those directors that hold Scott Wilson Shares have irrevocably undertaken to do in respect of their entire beneficial holdings of Scott Wilson Shares and those of their family members (representing approximately 2.04 per cent. of the existing issued share capital of Scott Wilson). 7. Information on Scott Wilson Scott Wilson is a global integrated design and engineering firm for the built and natural environments. With its headquarters in the United Kingdom, the Scott Wilson Group has a worldwide network of 80 offices and over 5,500 employees. Scott Wilson offers strategic consultancy and multi-disciplinary professional services in the railways, buildings & infrastructure, environment & natural resources and roads sectors. Scott Wilson's principal operating regions are the United Kingdom, Asia-Pacific, Europe, India and the Middle East, with regional centres in London, Hong Kong, Warsaw, New Delhi and Dubai. 8. Financial information relating to Scott Wilson Scott Wilson today is announcing its audited preliminary statement of results for the 52 weeks ended 2 May 2010, reporting revenue (including share of joint ventures) of GBP340.4 million (2009: GBP360.0 million) and profits before tax of GBP18.0 million (2009: GBP9.4 million). 9. Information on URS URS is a leading international provider of integrated engineering, construction and technical services with the capabilities to support every stage of the project life cycle. These services include planning, design and engineering, systems engineering and technical assistance, construction and construction management, operations and maintenance, and decommissioning and closure services. URS has a network of offices across the United States and in more than 30 countries, and provides services to a broad range of clients around the world, including United States federal government agencies, national governments of other countries, state and local government agencies in the United States and internationally, and private sector clients worldwide representing a wide variety of industries. URS is focused on four key market sectors: federal, infrastructure, power, and industrial and commercial. URS (on a consolidated basis) had revenues and net income before taxes for the year ended 1 January 2010 of $9,249.1 million and $269.1 million, respectively (and $10,086.3 million and $219.8 million respectively, for the year ended 2 January 2009). As at 1 January 2010, URS had total shareholders' equity of $3.9 billion. URS is listed on the New York Stock Exchange, with a market capitalisation as at 25 June 2010 of $3.4 billion. Universe Bidco Limited is a company newly incorporated in England and Wales under the 2006 Act and is a wholly owned subsidiary of URS. Universe Bidco has not traded prior to the date of this Announcement (except for entering into transactions relating to the Offer). 10. Management and employees URS recognises the strengths of the Scott Wilson management team and believes that the retention of key management and employees following any transaction is important to helping ensure the ongoing success of the Enlarged Group. It is therefore intended that Hugh Blackwood will join the URS Management Committee and oversee from London the combined international operations in the United Kingdom and Ireland, Continental Europe, the Middle East, India and China. It is also intended that other members of Scott Wilson's executive management team will have important roles to play within the Enlarged Group. These roles will be finalised following completion of the transaction and during the integration planning. URS believes that the Offer will create significant opportunities for Scott Wilson employees within the Enlarged Group, including access to numerous professional development programmes and a wide range of technically challenging and exciting projects. If the Offer is completed, URS envisages that its operations for the UK, Ireland, Continental Europe, the Middle East, India and China would be combined with those of Scott Wilson, with the operational headquarters located in London. URS has given assurances to the Scott Wilson directors that following the Scheme becoming effective, the accrued employment rights, including pension rights, of all management and employees of Scott Wilson will be fully safeguarded. 11. Scott Wilson Employee Share Schemes (MORE TO FOLLOW) Dow Jones Newswires June 28, 2010 02:00 ET (06:00 GMT)