Houston-based engineering and construction company KBR (NYSE: KBR) has agreed to purchase the U.S. government services business of Honeywell (NYSE: HON) for $300 million in a push to continue expansion efforts in the federal market.
KBR said Friday it expects to close the transaction subject to regulatory approval in October and the addition of the Honeywell Technology Solutions Inc. business to also increase earnings and cash flow in 2017.
This transaction represents KBR’s second acquisition in the federal market within the year as the former Halliburton subsidiary also purchased the El Segundo, California-based engineering services contractor Wyle in July for $550 million and rebranded it to KBRWyle as the parent’s U.S. government subsidiary.
KBR sought to lower its risk profile and obtain greater revenue balance between the government services segment and an engineering and construction business facing global headwinds such as low crude oil prices.
Upon completion, KBR expects its projected $2.5 billion in annual government services revenue to represent 41 percent of total pro forma sales per year with the E&C segment at 51 percent and the technology and consulting business holding the remaining 8-percent share.
The estimated $600 million-revenue HTSI business is based in Columbia, Maryland and has 3, 550 employees that provide aerospace, logistics, satellite and cybersecurity services to federal agencies such as NASA, the Defense Department and intelligence agencies.
HTSI’s employees are based in 39 U.S. states and in 14 countries worldwide across regions such as the Middle East and Asia.
HTSI will become a part of KBRwyle upon the deal’s closure and the $300 million transaction value includes $34 million in acquired tax benefits and other adjustments.