AECOM has announced the closing of the sale of its Power construction business to affiliates of CriticalPoint Capital LLC. Terms of the deal were not disclosed.
The Los Angeles, California-based infrastructure consulting firm, which this month announced a restructuring plan, earlier this year closed on the $2.4 billion sale of its Maryland-based Management Services business—which provides consulting services to the government sector—to New York-based private equity firms American Securities and Lindsay Goldberg.
“The sale of the Power construction business marks another milestone in the successful execution of our transformation into a higher-margin, lower-risk Professional Services business,” said Troy Rudd, AECOM’s CEO, in an Oct. 16 news release. “We have built significant momentum in our business and continue to advance efforts to align our organization around a global structure that fosters a culture of collaboration, better connects our expertise and focuses on our best growth opportunities. On behalf of our company, I thank the Power construction team for their contributions over the years and wish the business and CriticalPoint Capital the best of success.”
Wachtell, Lipton, Rosen & Katz served as legal advisor to AECOM for the transaction. DBO Partners LLC served as financial advisor.
CriticalPoint Capital is headquartered in Manhattan Beach, California. The company, founded in 2012, says it “is an operationally-focused private equity firm specializing in corporate divestitures, companies in a state of transition, and special situations across North America.”
CEO Announces Restructuring
Rudd is two months into his role as chief executive of AECOM after taking over on Aug. 15. He announced an operational restructuring of the company on Oct. 5. As part of that move, Lara Poloni, who took over as company president in June, has taken charge of the company’s entire design and consulting services business, which comprises much of AECOM’s $13.6 billion in revenue. The restructuring eliminated the position of group president for design and consulting services Americas; AECOM said Steve Morriss, who held that position, “has stepped down effective immediately.”
AECOM in its Oct. 5 announcement said, “This initiative further simplifies the operating structure of the company and will enable greater connectivity and collaboration across the enterprise.” Morriss is continuing as a consultant for AECOM during a transition period.
“Our greatest opportunity is to fully capitalize on the expertise that is inherent across our organization by thinking and acting as one global company—and in order to do that, we need to be structured as one,” Rudd said in the Oct. 5 statement announcing the restructuring. “[This] announcement is a critical step in the advancement of our strategy to best position the business for success, to ensure that we continue building on our momentum toward our vision of establishing a new standard of excellence in the industry and to, in turn, create exceptional value for our stakeholders.”
The restructuring announcement also noted that Randy Wotring, AECOM’s chief operating officer, has retired effective immediately. Wotring came to AECOM from URS Corp., which AECOM acquired in 2014. Wotring will continue to serve as a senior adviser to AECOM through the end of 2020.
Share Buyback Program
AECOM, which has tried to boost its value for shareholders, on Oct. 2 announced it had completed a $155 million share repurchase program that began in September. The company also said it plans to repurchase up to $300 million worth of additional shares through the end of this year, about half of the company’s total outstanding share repurchase authorization of $605 million.
The restructuring and share buyback are the latest moves AECOM has taken to boost shareholder value. That includes the announcement in October 2019 that the company—under pressure from New York hedge fund investor Starboard Value after that group purchased a 4% stake in AECOM—had agreed to sell the Management Services business to affiliates of American Securities and Lindsay Goldberg. That deal closed in January.
Then-CEO Michael Burke in November 2019 said he was retiring, announcing he would leave the company in March of this year. AECOM’s board pushed back Burke’s exit due to the coronavirus pandemic; he eventually turned over his duties to Rudd on Aug. 15.
AECOM a year ago, when it announced the deal to jettison Management Services, said it wanted to de-risk the business and increase margins. The goal was to streamline AECOM into a professional services firm focused on design, planning, architecture, engineering, program management, and construction management. AECOM at the time said it would use the money from the sale to reduce debt and repurchase stock.
—Darrell Proctor is associate editor for POWER (@POWERmagazine).