Aecom responds to US investor that urged closure of construction unit
US giant says "intent to exit all self-perform construction exposure" proves its commitment to raising shareholder value
Aecom has issued a response to Starboard Value, a 4% investor whose managing member, Peter Feld, earlier this week called on the company to shutter its construction business and review fellow US firm Jacobs’ turnaround as part of wider suggestions to boost profitability at the American engineering consultancy.
In a statement, Aecom said it had “taken and [continued] to take proactive steps from a position of strength to create meaningful shareholder value”.
Aecom said its recent decision to spin-off its management services business – one of the three major units that it operates alongside the design and consulting, and construction segments – as a standalone government services company proves its commitment to raising shareholder value.
The firm said its implementation of a $225m margin-enhancing general and administrative expense reduction plan was also part of its shareholder focus, as was its “ongoing review of margin improvement opportunities” and its “intent to exit all self-perform construction exposure by the end of the fiscal year”.
Aecom will also carry out stock repurchases under a $1bn authorisation plan.
In its statement, the company added: “Aecom welcomes and appreciates the input and engagement of all of its shareholders and will review [Starboard Value’s] letter as the company continuously assesses actions that can further enhance our value-creation strategy.”
Feld’s letter, dated 20 June, said Aecom’s “consistently poor operating history” had resulted in “several years of disappointing shareholder returns”.
Describing Aecom as “a good business with a bright future”, Feld said the firm must, with “an open mind”, consider urgent mechanisms such as the closure of its construction business and a review of Jacobs’ “substantial organisational restructuring” to explore ways in which it could unlock “significant opportunities for material improvement”.