KBR Buys Government Contractor Wyle for $570 Million

Engineering, procurement and construction (EPC) company KBR Inc. (NYSE: KBR) announced Monday morning that it has reached a definitive agreement to acquire privately held Wyle for $570 million, including a $30 million tax benefit adjustment and subject to further customary adjustments for Wyle’s cash and debt.

Wyle provides specialized engineering and other technical and scientific services primarily to the U.S. federal government. The company’s 3,800 employees will become a unit within KBR’s government services sector. Wyle’s funded backlog totals $440 million and the company has an additional $1.1 billion of orders that have not yet been funded but for which funding is expected.

The acquisition is expected immediately to add to KBR earnings and cash flow. KBR said the transaction will initially be funded using its existing credit facility and approximately $200 million in cash.

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KBR CEO Stuart Bradie said:

This strategic acquisition creates the equivalent of a global $2 billion Government Services organization with full service capabilities drawing on the best in class capabilities of both organizations. … This acquisition provides us with broader relationships with U.S. Government clients and grows our U.S. presence by acquiring a highly respected U.S.-focused franchise. The acquisition is expected to be accretive in the first year and provide longer term synergistic opportunities in markets where KBR’s large-scale logistics and project management capabilities combine with Wyle’s specialized technical capabilities.

KBR’s stock traded down about 0.9% just before noon Monday, at $14.14 in a 52-week range of $11.61 to $20.77.