Having successfully divested its government-contracting business, AECOM continues to look for a successor to Chairman and CEO Michael Burke.
Burke, 56, announced in November that he plans to retire pending selection of a replacement. Speaking to financial analysts Monday during AECOM’s quarterly earnings call, he said a search committee is making good progress on finding the next chief executive.
Burke joined the Los Angeles-based engineering and construction multinational in 2005 and worked his way up to chief financial officer in 2006, president in 2011, and CEO in 2013.
He declined to answer a question from a Wall Street analyst on potential “suitors” or merger partners for the rest of AECOM after the Management Services sell-off. “We are not going to comment on speculation in the market about mergers and acquisitions.” The Los Angeles Business Journal and other publications have reported Montreal-based management and consulting company WSP Global could be looking to acquire AECOM.
AECOM management said during the call the company will use about half of the $2.4 billion in proceeds from sale of its Management Services branch to pay down debt, and much of the rest for stock repurchases. Companies often buy back stock when they consider their share price undervalued.
On Friday, AECOM closed its sale of the government contracting arm to a joint affiliate of two New York-based investment houses — American Securities LLC and Lindsay Goldberg LLC. It is one of the moves AECOM is taking to reduce its risk profile and concentrate on business areas it considers most profitable.
The former AECOM government business, now operating as Amentum, has contracts to operate the DOE Waste Isolation Pilot Plant in New Mexico and provide cleanup at the Oak Ridge Site in Tennessee, among others awards.
With AECOM leaving the DOE market, the publicly traded companies that are now potential rivals or partners to Amentum for Energy Department business include BWX Technologies, Huntington Ingalls Industries, Jacobs, Leidos, Parsons, Atkins parent SNC-Lavalin, Veolia, and Fluor—the latter of which plans to sell its government contracting business later this year.
