A group led by the president and chief executive of EA Engineering, Science and Technology Inc. of Hunt Valley reached an agreement yesterday to acquire the troubled environmental services company and take it private in a deal worth $9.3 million.
Under the agreement, Loren D. Jensen, EA's president and chief executive, and the Louis Berger Group Inc., a New Jersey international engineering firm, are offering $1.60 a share through their investment group, EA Engineering Holdings LLC.
News of the pending acquisition sent the company's shares up 47 percent, or 50 cents, to close at $1.56 on the Nasdaq small-cap market - more than double their 52-week low of 69 cents.
EA reported its first annual profit in five years in 2000, but has fallen back into the red this year. It said in September that it would consider strategic alternatives, including sale of the company, and hired Legg Mason Wood Walker Inc. and Techknowledgey Strategic Group of Boulder, Colo., to help explore its options.
EA went public Oct. 31, 1986, with an initial public offering of 1 million shares at $10 per share, according to a spokeswoman.
Jensen, who controls 2.25 million, or 39 percent, of the company's 5.8 million shares, was unavailable for comment yesterday, and the president and chief executive of Louis Berger Group, Derish Wolff, was traveling and also unavailable, according to a Louis Berger spokeswoman.
Melissa L. Kunkel, an EA spokeswoman, said that no changes are planned in how EA operates and that its 400 employees would not be affected. Jensen would continue in his roles as president and chief executive, she said.
EA's board of directors has approved the deal and is recommending that stockholders tender their shares.
"We've been working successfully together on various projects for several years and have a lot of things in common," Kunkel said. "The Louis Berger Group is an international company which will benefit EA's business as an operating affiliate."
EA has offices in 15 states, Mexico and Guam, and provides such services as air, water, natural resource, energy, and solid-waste management to government agencies and industrial companies.
Kunkel said EA has worked with Louis Berger in the past on contracts. Louis Berger, based in East Orange, N.J., has 3,000 employees in more than 60 offices worldwide. Its services range from architectural design and rehabilitation of major public works to water resource planning and management.
The private company was ranked No. 20 in the United States in terms of combined professional services revenue, with $378.2 million last year, by Engineering News-Record, an industry publication. Louis Berger dwarfs EA in sales, which last year had sales of $35.2 million.
Joseph A. Vafi, a senior analyst with investment banking firm Robertson Stephens in San Francisco, said the deal follows a trend toward consolidation in the environmental services industry.
"I think, in general, that smaller companies in the environmental services sector are always acquisition targets ... there's just a lot of them out there. I think it's a pretty healthy sector right now."
EA, however, has taken hits on earnings this year. For the fiscal third quarter that ended May 31, the company reported yesterday a loss of $400,300 or 7 cents per diluted share, compared with net income of $37,900 or a penny per diluted share, for the corresponding period last year. Net sales slumped 11 percent to $8.03 million.
The net loss for the past three quarters was $322,600 or 6 cents per diluted share, compared with a net profit of $323,700 or 5 cents per diluted share for the corresponding period a year ago. Net revenue for the nine-month period slipped to $25.3 million from $26.5 million for the prior year period.
EA said revenue had been cut by delays on large federal contracts.
