AECOM in a news release said it would pay $56.31 a share in cash and stock for URS. Including the assumption of URS debt, the total enterprise value of the deal is about $6 billion.

Terms were unanimously approved by both of the California-based companies, and the acquisition is expected to close in October. The combined company will have about $19 billion in annual sales and more than 95,000 employees.

URS stockholders will receive $33 in cash and 0.734 share of AECOM common stock for each URS share. The price represents a premium of 19 percent over the trailing 30-day average closing price of URS shares and an 8 percent premium over URS's closing share price on Friday of $52.02.

AECOM Chief Executive Officer Mike Burke said in an interview that the deal will strengthen its expertise in the oil, gas, nuclear and construction sectors. The combined company will also be able to better compete more effectively on global projects with rivals in China and Korea.

"While URS is a predominately North American player today, we can bring that to our global platform spread over 150 countries...," Burke said.

Reuters reported on Friday that URS had held talks with industry rivals and buyout firms about a potential sale. URS, which has been under pressure from activist investor Jana Partners to enhance shareholder value, hired bankers to contact potential buyers, according to people familiar with the efforts.

Burke said the idea for the deal hatched during a courtesy visit to URS after he was appointed chief executive in March. Burke met with URS Chief Executive Officer Martin Koffel.

"While we've been competitors in certain aspects, we quickly realized that the two of us were much more complementary that we had originally envisioned," Burke said.

Burke's management team will run the combined company and Koffel will retire.

URS was also attractive to AECOM because of its U.S. government contracts. U.S. federal agencies accounted for a third of its 2013 revenue and government customers include the U.S. Army and the Department of Energy.

The transaction will create $250 million in annual cost-saving synergies, nearly all of which will be achieved by the end of fiscal year 2016, AECOM said. And it will be more than 25 percent accretive to AECOM's cash earnings per share in fiscal year 2015, excluding transaction costs, the company said.

AECOM was advised by Bank of America Merrill Lynch and Moelis & Company, as well as law firm Gibson, Dunn & Crutcher. URS was advised by Dean Bradley Osborne and Citigroup Inc while Wachtell, Lipton, Rosen & Katz and Cooley LLP provided legal counsel.