Jacobs Acquires Federal Network

Zacks

Engineering and construction company Jacobs Engineering Group Inc. (JEC) completed the previously announced acquisition of Federal Network Systems, a subsidiary of  Verizon Communications Inc. (VZ). The terms of the transaction were not disclosed.

Federal Network Systems has roughly 750 employees involved in integration, operation, designing, securing and maintenance of voice, data, and video networks.

Federal Network offers services including information technology and data security solutions, and systems integration and communication for the global market. These services cater to the Intelligence Community, the Department of Defense and federal civilian customers. The acquisition will thus, enable Jacobs to tap the growth potential in the Intelligence Community industry.

Inorganic growth has lately been Jacobs’ favored method of expansion. Its recent takeovers include Eagleton Engineering, LLC, for an undisclosed amount (Feb 2014), FMHC Corporation (Jan 2014) and MARMAC Field Services (Nov 2013). These acquisitions have been contributing significantly to the results, and the trend is expected to continue in the coming quarters as well.

Leveraging Eagleton’s experience and expertise, Jacobs anticipates achieving a greater foothold in the oil and gas industry through better midstream and upstream pipeline engineering, design and field surveying services. Further, the FMHC acquisition will aid Jacobs in enhancing its geographical presence as well as services.

The company had a significant cash and cash equivalents balance of $691.3 million exiting fiscal second-quarter 2014 (ended Mar 28, 2014), which it intends to use for further organic and inorganic growth. 

Jacobs is one of the leading providers of professional, technical and construction services to industrial, commercial and governmental clients. With a market capitalization of $7.0 billion, Jacobs holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Willdan Group, Inc. (WLDN) and Beazer Homes USA Inc. (BZH). While Willdan Group sports a Zacks Rank #1 (Strong Buy), Beazer Homes holds a Zacks Rank #2 (Buy).

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