SKM merges with Jacobs in $1.3bn engineering deal NEW YORK-LISTED Jacobs Engineering has agreed to buy Australias Sinclair Knight Merz for $1.3 billion in one of the largest global deals in the engineering space for some time. The employee-owned SKM, founded in Australia in 1964, is run by chief executive Santo Rizzuto and chairman Peter Scott. It has 660 shareholders. SKM was advised by Greenhill, and a tie-up with another group has been mooted for almost two years, although the latest deal with Jacobs was speculated about a week ago. Jacobs Engineering, based in California and listed on the New York Stock Exchange, is believed to be a similar company that is interested in expanding its presence in Australia. Last year its turnover was $US11bn. SKM's current annual revenue is about $1bn and its earnings before interest, tax, depreciation and amortisation are about $180m. About three-quarters of its earnings were derived from Australia and the group was looking for expansion opportunities into new markets and needed additional scale, according to a source. SKM's major projects have included the Hume Highway between Sydney and Melbourne and the Dampier port upgrade in Western Australia. In a statement to the New York stock exchange, Jacobs said the purchase price reflected an enterprise value of $1.2bn, plus adjustments for cash, debt and other items. The deal will involve SKM's shareholder approval and Foreign Investor Review Board approval. Mr Rizzuto said the merger would strengthen SKM's market position. This is an exciting opportunity. It uniquely positions us amongst our global peers and opens the way for us to achieve even greater things in the future," he said. It adds scale, diversification and growth opportunities to our business. Jacobs' president, and chief executive Craig Martin said that the combination was a unique fit that strongly delivered on the company's strategic ambitions. "SKM's culture, values, and operating philosophy are very compatible with ours, making our companies an excellent fit for one another," he said. Our capabilities and geographies have little overlap, enabling us together to continue to expand our client relationships and provide significant opportunities for our employees. We are enthusiastic about the potential.