Houston-based KBR (NYSE: KBR) has agreed to purchase U.S. federal engineering and scientific services contractor Wyle Laboratories for $570 million in a move both companies expect to create a global government services business segment with an estimated $2 billion in projected annual contract work.
KBR said Monday it expects to close the transaction in the third quarter and will fund the deal with $200 million in cash-on-hand and an existing line of credit facility, while the company also anticipates an increase to earnings per share.
The acquisition’s value also includes a $30 million tax benefit to KBR and the global engineering company’s board of directors has approved the deal.
KBR reported $663 million in government services revenue for 2015 to represent approximately 10 percent of the company’s total $6 billion sales last year and expects that segment to make up nearly one-fifth of its overall business with the addition of Wyle.
El Segundo, California-headquartered Wyle posted $836 million in 2015 revenue and reported $440 million in funded backlog as of Dec. 31 with an additional $1.1 billion in unfunded orders.
Wyle employs 3, 800 workers that perform research-and-development and test-and-evaluation services for aerospace and defense programs with additional offerings such as operations, maintenance and field logistics.
Wyle was founded in 1949 and its federal agency customers include the Defense Department and components such as the Army, Navy and Air Force.
The company also counts NASA as a main customer and the company holds a potential 10-year, $1.44 billion contract with that agency for healthcare and wellness services to astronauts on the International Space Station and biomedical research.
KBR spun out from oil field services company Halliburton in April 2007.