Engineering and construction giant AECOM said Monday it has completed the $2.4 billion sale of its Management Service business to a joint venture of two New York investment firms.
Sale of the subsidiary to American Securities LLC and Lindsay Goldberg LLC closed on Friday, according to an AECOM press release.
The new company, which will be called Amentum, is now a major contractor for the Department of Energy, Defense Department, and several nuclear-related agencies in the United Kingdom. Amentum is a Greek word for a leather strap used to propel a javelin straighter, farther, and faster.
The seller and buyers announced the deal in October. Los Angeles-based AECOM expects to tap proceeds from the sale to reduce debt in its second quarter.
AECOM initially said in June 2019 that it would divest its government contracting unit via an initial public offering. But it soon scrapped that approach after receiving interest from ventures that wanted to the buy the business outright.
The former AECOM unit is a lead partner in joint ventures holding several billion dollars’ worth of business for DOE’s Office of Environmental Management. The contracts include operation of the Waste Isolation Pilot Plant in New Mexico, cleanup of the Oak Ride Site in Tennessee, liquid waste management at the Savannah River Site in South Carolina and tank waste operations at the Hanford Site in Washington state. The contractor is also lead partner in a venture that last month won a potential 10-year, $10-billion contract for cleanup at the Hanford Central Plateau.
For the first fiscal quarter ended Dec. 31, 2019, AECOM reported revenue of about $3.24 billion, down from $3.36 billion during the same quarter a year ago. Net earnings of $31 million also dropped a bit from about $32 million on a year-over-year basis. Earnings per share of $0.26 for the latest quarter were down from $0.32 during the quarter ended Dec. 31, 2018.
AECOM could have more to say about the sale in a noon ET conference call on the company’s latest earnings.
