Michael Baker Corp. sold for $397M to private equity investor
Michael Baker Corp. agreed to a sweetened takeover offer valued at $397 million in cash from Integrated Mission Solutions LLC, a combination that should give the struggling Moon engineering and construction firm more heft to compete for government projects.
Both companies provide services to the government but complement each other, said Baker's top executives in a message to employees. Integrated Mission Solutions' operations and customers are primarily overseas, while Baker's are primarily within the United States.
Analysts said the business combination would bode well for Baker, which has struggled to win public engineering projects from state and federal governments that reduced spending on highways and other infrastructure.
“This is the right thing to do for Baker,” said Tahira Afzal, an analyst with KeyBanc Capital Markets Inc. in New York. Public infrastructure business “has been weak for several years,” she said, which adds pressure on smaller engineering/design firms such as Baker to compete.
Integrated Mission Solutions LLC is an affiliate of DC Capital Partners LLC, a private-equity firm in Washington. DC Capital bought 5.2 percent of Baker shares after it made an unsolicited bid of 24.25 a share in December.
In response to the initial bid, independent directors on Baker's board began reviewing strategic alternatives, including the offer from DC Capital. They agreed to a sweetened offer of $40.50 for each Baker share — a 37 percent premium over Friday's closing price of $29.60.
Baker has seen its fortune sag as government projects became harder to win. The company's 2012 profit sank 84 percent to $2.8 million, including a substantial drop in operating income from the firm's federal government segment.
Integrated Mission Solutions, or IMS, is a provider of engineering, construction and technical services to the Army Corps of Engineers and to defense and intelligence agencies.
DC Capital and IMS agreed to keep the Baker name, its presence in the Pittsburgh area and its local workforce.
Pending approval from Baker shareholders and regulators, the transaction could be completed this summer or fall.
DC Capital executives could not be reached.
“This is a significant step for both companies. The combination of Michael Baker and IMS will create a company with over $1 billion in revenue, approximately 5,000 employees, and a platform with global reach,” said IMS Chairman Thomas Campbell, who founded DC Capital.
Baker employs 3,000 people in 100 offices nationwide, including 725 employees in Western Pennsylvania.
Baker stock closed at $40.39, up $10.79 from Friday's close. The shares traded for as much as $40.40 on Monday, setting a 52-week high.
The merged company would be led by Baker's co-CEOs, H. James McKnight, chief legal counsel, and Michael Zugay, chief financial officer, Baker spokesman David Higie said.
Thomas Olson is a Trib Total Media staff writer.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Nonprofit Concordia Lutheran Ministries adjusts to marketplace realities
- Dominion Resources CEO Farrell made $17.3M in 2014
- Pittsburgh region’s unemployment rate stays steady
- GNC will expand its testing of supplements in settlement with NY
- Consumer spending inches up in February as income soars
- Increased credit card use reflects confidence, flat wages
- Stocks gain on encouraging signs in spending and home sales
- Farmers fund research on gluten-free wheat
- Falling demand for steel not likely to reverse any time soon
- Toyota to carry new attitude into production
- UnitedHealth bulks up for prescription drug cost fight