M&A

Parsons sets size & specs for public offering

Centreville, Virginia-based engineering and government services company Parsons Corp. has set the terms for its pending initial public offering, according to amended regulatory documents and a company statement filed Friday.

Parsons plans to offer 18.5 million shares to public investors at a price of between $26.00 and $28.00 per share, which would raise equity of $481 million-to-$518 million. Underwriters for the IPO have a 30-day option after the start of trade to purchase up to 2.77 million additional shares in the event of increased demand from public investors.

The company's stock is anticipated to start trading around May 7, according to the New York Stock Exchange's listing of upcoming public offerings. Parsons first unveiled its filing for an initial public offering April 12.

Parsons’ going to the public markets for its next chapter does not automatically mean the seven-decade old company’s employee stock ownership plan is going out the window. The Parsons ESOP will hold 80.8 percent of the stock, or 78.1 million shares, which the amended filing says are valued at an average $8.47 per share.

Proceeds from the IPO will go toward payments on debt and a cash dividend of $52.1 million for shareholders, in this case the employees who participate in the ESOP.

Financial and other technical aspects of the IPO aside, entering the public markets gives Parsons an opportunity to tell the same kind of story as many of its larger competitors in the “AEC” arena – Architecture, Engineering and Construction.

AEC companies including Parsons have been active this decade in not only acquiring government technology contractors to diversify revenue but also have taken out longstanding incumbents for major federal IT contracts.

Earlier this year, Parsons moved their corporate headquarters to Centreville from the former home in suburban Los Angeles to be closer to customers and decision makers in the Washington, D.C. metropolitan region.

Parsons posted $3.5 billion in revenue last year with federal revenue representing 41.5 percent of that, or $1.5 billion, with critical infrastructure sales making up the rest.

Company-wide, Parsons reported an overall book-to-bill ratio of 1.26 on $4.48 billion in awards last year with a $7.9 billion total backlog. The federal segment’s book-to-bill was 1.5 on $1.8 billion in awards with a $4.48 billion backlog. 

Morgan Stanley, Goldman Sachs & Co. and Bank of America Merrill Lynch are lead underwriters for the IPO. Other underwriters are Wells Fargo Securities, Jefferies, SunTrust Robinson Humphrey, Scotiabank, Mitsubishi UFJ Financial Group, and Cowen and Company.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.

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