Aecom Piles Up Three Acquisitions of Water Treatment Facilities

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Aecom Technology Corp. just wrapped up a banner week of acquisitions, headlined by the $510 million purchase of a Long Beach wastewater treatment outfit.

The Los Angeles-based company, which provides a range of engineering and consulting services, made three acquisitions that will make it a large global player in water and wastewater treatment and other infrastructure services.

The company announced it will purchase Earth Tech Inc., a water treatment business unit of Tyco International Ltd. It was the third acquisition and second wastewater treatment deal in two days for $4.2 billion Aecom.

Earth Tech, which has about 7,000 employees worldwide, reported revenue of $1.3 billion in 2007. After the deal closes in the third quarter, Aecom said it plans to divest some non-core operational areas of Earth Tech for an estimated $200 million.

The deal, along with the acquisition of another wastewater treatment company last week, will bolster Aecom’s growing environmental business.

John Rogers, an analyst with D.A. Davidson & Co. who tracks Aecom, said the acquisition of such a large environmental firm improves the company’s growth potential.

“The combination appears very compelling strategically and will position Aecom among the largest global providers of water related environment and infrastructure engineering services,” he said in a report.

Aecom reported net income of $100 million on revenue of $4.24 billion in its 2006-2007 fiscal year ended Sept. 30. Rogers rates the company’s stock “neutral,” with a target price of $30. Shares closed Feb. 14 at $27.93.

The company also announced last week the acquisition of Boyle Engineering, a Newport Beach-based water treatment facility. Terms of the deal were not disclosed.

“For more than 65 years, Boyle has been a leader in the delivery of water and wastewater services,” said Chief Executive John Dionisio in a statement. “They will enhance our leadership in the water and environmental infrastructure markets.”

Aecom, which also announced the purchase of Canadian engineering company Tecsult Inc., is no stranger to the acquisition market. Since going public less than a year ago, Aecom has made more than 10 acquisitions in a variety of engineering and consulting sectors.

In a recent interview, Chief Financial Officer Michael Burke said acquisitive growth is a key element of the company’s expansion plan. He said the company plans to pay particular attention to its environmental business sector.

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