New Jacobs, Amentum creation focuses on large corporate contracts

The new company, formed through the merger of Amentum with two of Jacobs’ government-facing business units, will eventually be named as the completion date nears.

But even with that detail TBD, the deal to bring these three teams together and form a larger public service provider certainly has a plan to make the most of the combination.

During a conference call with reporters on Tuesday, Amentum CEO (and CEO of the new company) John Heller described the new entity as a “global systems integration and technology solutions company” positioned in modernization efforts by the US and allied governments.

Amentum itself has been on that path since the company’s 2020 spinout from then-parent AECOM, after which it bought former competitors DynCorp International and PAE within less than two years of each other.

On Jacob’s side, the two entities included in this combination are its Critical Mission Solutions segment and the Cyber ​​& Intelligence business unit.

The Cyber ​​& Intelligence unit, internally dubbed “C&I,” resides within Jacobs’ Divergent Solutions segment, which stood up during 2022 to focus on data-centric programs.

The C&I team and Divergent Solutions as a whole have also been working on product development efforts as part of their larger offering. While Jacobs will retain some of the product portfolio within C&I, Heller said the new company will have some of that as well.

But contract opportunities on the horizon are where the new company will obviously focus much of its energy after it opens for business, and is a major driver behind the rationale behind the merger.

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These capabilities aren’t just different technologies either, but are certainly part of the equation as Amentum and Jacobs’ CMS and C&I teams have made technology central to their strategies.

“We want the relationships with the customers and the capabilities that they need and want a contractor to have to compete and perform in these large enterprise contracts,” Heller said on the call. “Our government and our allies continue to be challenged in areas such as space, in cyber and mission operations.”

These three mission areas are where this new company wants to be a leader.

As for the other fields, Heller provided a short list that includes engineering, science, data fusion and global energy.

A fourth area involves a push by many US and international governments to reduce or even eliminate their carbon footprint.

Inside “NewCo’s” numbers

Amentum and Jacobs are touting the new entity as having about $13.4 billion in combined annual revenue, a workforce of 53,000 employees in 83 countries.

The revenue figure is based on the fiscal years of Amentum and Jacobs, which run concurrently with the federal government from October to September.

What everyone involved is currently calling “NewCo” would be positioned between Leidos and Booz Allen Hamilton in terms of annual sales, according to Jacobs’ presentation to investors about the transaction.

Leidos posted $15 billion in sales for the government’s most recent year, which ended Sept. 30, and Booz Allen’s top line was described as $10 billion in that presentation.

Amentum’s fiscal 2023 revenue was $7.9 billion, while Jacob’s CMS and C&I sales contribution to NewCo is about $5.5 billion.

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Amentum and Jacobs also estimate the new company’s profit figure at $1.1 billion in expected combined adjusted EBITDA for 2024 (earnings before interest, taxes, depreciation and amortization), which equates to an expected adjusted EBITDA margin of 8%.

Upon closing, the new company expects to realize between $50 million and $70 million in net cost synergies. Amentum’s enterprise infrastructure is ready to continue in that role for the new company.