TribLIVE

| Business

 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Michael Baker Corp. sold for $397M to private equity investor

Email Newsletters

Click here to sign up for one of our email newsletters.

On the Grid

From the shale fields to the cooling towers, Trib Total Media covers the energy industry in Western Pennsylvania and beyond. For the latest news and views on gas, coal, electricity and more, check out On the Grid today.

'American Coyotes' Series

Traveling by Jeep, boat and foot, Tribune-Review investigative reporter Carl Prine and photojournalist Justin Merriman covered nearly 2,000 miles over two months along the border with Mexico to report on coyotes — the human traffickers who bring illegal immigrants into the United States. Most are Americans working for money and/or drugs. This series reports how their operations have a major impact on life for residents and the environment along the border — and beyond.

By Thomas Olson
Monday, July 29, 2013, 10:15 a.m.
 

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.

Subscribe today! Click here for our subscription offers.

 

 


Show commenting policy

Most-Read Business Headlines

  1. U.S. Steel joins major producers in new dumping complaint
  2. Consol Energy reports deep loss, bigger Utica results
  3. Leisure, hospitality lead Pittsburgh area job gains
  4. Ambridge’s PittMoss takes off with help from TV show, Mt. Lebanon native Cuban
  5. U.S. Steel to debut oil, gas pipeline connector
  6. Muni bond funds stressed
  7. Opulent listings get high-end treatment
  8. Plummeting natural gas prices slash revenue of Marcellus shale producers
  9. Alcoa among 13 firms in $140B carbon-footprint pledge
  10. Invasive beetle costs Pittsburgh-area power companies plenty
  11. Taxpayers may owe billions in student loans