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Michael Baker Corp, IMS to Merge; Jeffries to Provide Debt Financing

July 30, 2013, 08:03 AM
Filed Under: Industry News

Michael Baker Corporation has entered into a definitive merger agreement to be acquired by Integrated Mission Solutions, LLC (IMS), an affiliate of DC Capital Partners, LLC.

The transaction will be financed through a combination of cash provided by IMS as well as debt financing that has been committed, subject to the terms of a commitment letter, by Jefferies Finance. Jefferies is also serving as exclusive financial advisor to IMS and DC Capital. Arnold & Porter  is serving as legal advisor to IMS and DC Capital.

Houlihan Lokey is serving as financial advisors to Baker in this transaction. Jones Day and K&L Gates are serving as legal advisors to Baker.

Under the terms of the agreement, which has been unanimously approved by Baker’s Board of Directors, Baker shareholders will receive $40.50 in cash for each share of common stock that they own, in a transaction valued at $396.9 million. The per share price represents a 37% premium to Baker’s closing share price of $29.60 on July 26, 2013, a 55% premium to the average 90-day share price, and a 93% premium to the share price on December 18, 2012, the day before DC Capital publicly proposed to acquire Baker.

Under the terms of the agreement, a subsidiary of IMS will commence a tender offer to acquire all of the outstanding Baker common shares. Baker’s Board of Directors unanimously approved the offer. Any shares not tendered in the offer will be acquired in a merger at the same cash price as paid in the tender offer. Closing of the tender offer is conditioned upon customary closing conditions, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act. The transaction is expected to close late in the third quarter or early in the fourth quarter of 2013.

“Baker is a well-known and highly regarded firm in the architecture, engineering and construction services industry. The transaction, which we believe delivers outstanding value to shareholders, results from a thorough, extensive strategic assessment process initiated by the Board early this year,” said Baker’s Robert N. Bontempo, Chairman of the Board of Directors. “We believe that this union with IMS will provide substantial value to shareholders, while reinforcing our commitment to our customers to continuously provide them with excellent service and high quality professional services.”

In an effort to preserve Baker’s heritage and culture, IMS has agreed to retain the Baker name, maintain Baker’s presence in the Pittsburgh area, and keep the current organization and staff of Baker essentially intact.

Thomas J. Campbell, chairman of IMS and founder of DC Capital, said, "This is a significant step for both companies. The combination of Michael Baker and IMS will create a company with over $1.0 billion in revenue, approximately 5,000 employees, and a platform with global reach. IMS has a strong presence internationally with a history of operating on all five continents. This geographic footprint in support of our customers in growth areas such as infrastructure, development, intelligence, and technology combined with Michael Baker’s complementary capabilities, highly certified, security cleared workforce, and distinctive North American presence will greatly enhance our collective ability to manage and execute larger projects.”

Michael Baker Corporation provides engineering, design, planning and construction services for its clients’ most complex challenges worldwide. The firm's primary business areas are architecture, aviation, defense, environmental, geospatial, homeland security, municipal & civil, oil & gas, rail & transit, telecommunications & utilities, transportation, urban development and water.

Integrated Mission Solutions, LLC (IMS) is a rapidly growing, global provider of a comprehensive continuum of mission critical services and solutions.

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