US contractor Jacobs Engineering has agreed to sell its Energy, Chemicals and Resources (ECR) division to Australia’s WorleyParsons for $3.3 billion, made up of $2.6 billion in cash and $700 million in WorleyParsons ordinary shares.

The North Sydney-headquartered group will double in size from the deal, which is the latest in a series of mergers in the engineering and construction sector. Last year, Jacobs bought US rival CH2M for $3.3 billion and Scottish oilfield chemicals major John Wood paid $2.9 billion to take over Amec Foster Wheeler. In January 2018, McDermott International merged with Chicago Bridge and Iron (CB&I).

ECR, which has nearly 31,000 employees, has a global footprint with long-term, blue-chip relationships in key strategic markets, most notably the US, Canada, the Middle East and India. According to WorleyParsons, the acquisition will create the world’s biggest provider of project and asset services in resources and energy, also providing global sector leadership in hydrocarbons, chemicals, and minerals & metals.

Andrew Wood, CEO of WorleyParsons, said the transaction will bring complementary capabilities in key business lines, including a best-in-class onshore and downstream maintenance, modifications and operations (MMO) capability for hydrocarbons projects.

Jacobs expects to receive around $2.6 billion in net proceeds from the deal, which will initially be used to pay down debt. On closing, the Dallas, Texas-headquartered group will receive approximately 58.2 million (about 11%) of WorleyParsons shares, which will be subject to a six-month holding requirement (but not earlier than Aug. 31).

Both boards of directors have approved the transaction, which is expected to close in the first half of 2019, subject to regulatory approvals and the usual conditions.

Following completion, Jacobs will be focused solely on its two higher growth, higher margin lines of business – aerospace, technology, environmental and nuclear (ATEN), and buildings, infrastructure and advanced facilities (BIAF).

"The increased financial flexibility we gain from this sale better positions us to invest in our ATEN and BIAF businesses, focusing our premier talent and expertise on technology, innovation and sustainable solutions that are priorities for our infrastructure and government services clients,” said Jacobs chairman and CEO Steve Demetriou. “These capabilities, along with our strong backlog and efficient global platform, will further strengthen our global leadership in these segments to drive meaningful value creation."