KBR’s expansion move into the U.S. and global government services markets became official on Monday when the Houston-based engineering company closed its $300 million purchase of the business known as Honeywell Technology Solutions Inc.
This deal’s closure took place nearly two months after KBR completed the $570 million acquisition of Wyle and these two transactions add up to what the buying party believes is now a $2.5 billion player in government services across the world with 7, 000 employees.
For KBR, this almost $900 million investment in the public sector market represents a move to diversify beyond its traditional engineering and construction work as the company expects 41 percent of its total annual sales to come from government services.
KBR CEO Stuart Bradie said in the HTSI deal closure’s announcement that his company views its bolstered government services business base as a provider of “high-value, low-risk, more predictable and long-term earnings capabilities” to help balance against the cyclical hydrocarbons business.
This statement reiterates Bradie’s message to investors in May after KBR first announced the Wyle deal, when he endorsed the federal market’s stability.
“There’s good visibility in the government side because of lengths in procurement cycles and we can see what’s down the tunnel 12-to-24 months out.”
To reflect its increased market presence and emphasis, KBR officially joined Executive Mosaic’s GovCon Index of 30 publicly-traded government contractors before markets opened Thursday for readers to follow and compare its stock to other GovCon services identities Leidos, SAIC, Engility, CACI and many others.
KBR entered the GovCon Index in a week that has seen a vast majority of equities rise after the Federal Reserve’s decision Wednesday to leave interest rates unchanged.
One additional full week of trading remains before the third quarter’s end and then it’s onto earnings season for many GovCon primes.
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