KBR to Buy Honeywell's Government Services Unit
August 12 2016 - 8:20AM
Dow Jones News
Engineering and construction firm KBR Inc. said it agreed to buy
Honeywell's government services provider, expanding its portfolio
to include aerospace logistics and services for intelligence
clients as part of its yearslong strategy to focus on its
government services business.
KBR on Friday said it would pay roughly $300 million for the
Honeywell unit, known as Honeywell Technology Solutions Inc. KBR
put the final transaction price at $266 million, after adjusting
for about $34 million of acquired tax benefits.
Chief Executive Stuart Bradie said the deal, which is expected
to offer more opportunities for higher-margin government services
work, would lower the company's risk profile as revenue in its
engineering and construction business has tumbled.
KBR, formerly a part of Halliburton Co., was one of the key U.S.
contractors in Iraq following the 2003 invasion, providing
logistical support for American forces, among other tasks. The
Houston-based energy-construction and government-contracting
company has been working to reshape its operations on the more
lucrative government services business amid declines in certain
contracts and the effect of lower energy prices on many firms'
capital spending budgets.
The Honeywell unit is based in Columbia, Md., and has about
3,550 employees in the U.S., Middle East and Asia. Its customers
include NASA, the U.S. Department of Defense and U.S. intelligence
agencies.
The transaction, subject to regulatory approval, is expected to
close by the end of October. The Honeywell unit will be integrated
into KBRwyle, KBR's government services subsidiary. KBR said the
move would add to earnings and positive cash flow in 2017.
Separately, Honeywell said the sale didn't impact its financial
guidance.
Shares of both Honeywell and KBR were inactive premarket. KBR
stock has risen 12% over the past month but is still down 16% from
a year ago.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
August 12, 2016 09:05 ET (13:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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