/ Corporate / KBR to Acquire Government Services Company, Wyle

KBR to Acquire Government Services Company, Wyle

Matt Ball on May 23, 2016 - in Corporate, Design/Engineering

HOUSTON, Texas, May 23, 2016 — KBR, Inc. (NYSE: KBR) announced today it has entered into a definitive agreement to acquire Wyle, Inc., a leading provider of specialized engineering, and professional, scientific and technical services primarily to the U.S. federal government.

Wyle delivers an array of cutting edge, custom solutions that drive mission success for customers in the U.S. Department of Defense, NASA and other federal agencies. Wyle’s expertise includes systems and sustainment engineering, program and acquisition management, life science research, space medical operations, information technology and the testing and evaluation of aircraft, advanced systems and networks.

This acquisition will combine KBR’s strengths in international, large-scale government logistics and support operations with Wyle’s specialized technical services, largely focused in the contiguous U.S. The addition of Wyle’s highly advanced capabilities significantly expands KBR’s global Government Services offerings, moving the business towards the high growth, more specialized, technology- and science-driven sources of long-term annuity type revenues with greater differentiation and higher margins, all of which are consistent with our previously announced strategy. Together with Wyle, KBR will now provide capabilities that span the full spectrum of the life-cycle of aerospace and defense programs from research and development, through test and evaluation, to operations, maintenance, and field logistics.

“Expanding our government services capabilities and service offerings into more profitable and complementary market segments is a key part of KBR’s growth strategy,” said Stuart Bradie, President and CEO of KBR, Inc. “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.”

“Adding Wyle’s highly specialized and differentiated offerings to our global government services portfolio improves KBR’s overall risk profile by expanding into other government funding sources for higher-margin and largely cost-reimbursable work,” Bradie continued. “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,” said Bradie.

Wyle will become a KBR business unit within KBR’s Government Services segment and will maintain much of its current structure to ensure business continuity. KBR and Wyle’s management teams will be highly focused on a successful transition which retains Wyle’s greatest asset, its 3,800 professionals, while also capitalizing on the new opportunities of the combined company across all of Government Services regions including the U.S., Europe, Middle East and Africa (EMEA), and Asia Pacific (APAC). As of year-end 2015, Wyle’s funded backlog was $440 million with an additional $1.1 billion of orders not yet funded, but expected.

One hundred percent of Wyle’s business will be acquired through the acquisition of shares pursuant to a merger sub-transaction structure. The transaction price to KBR is $570 million, after adjustments for approximately $30 million of acquired tax benefits, and subject to other customary adjustments, including for net working capital, net cash and indebtedness of Wyle. The transaction is expected to be immediately accretive to KBR’s earnings per share and will initially be funded by utilizing KBR’s existing line of credit facility and approximately $200 million in cash.

The transaction has been unanimously approved by the KBR Board of Directors and is subject to certain regulatory approvals and customary closing conditions. The closing is expected to occur in the third quarter of 2016.

Transaction Discussion Webcast

KBR will hold a public webcast today, 5/23/2016, at 8 a.m. Central Time (9 a.m. Eastern Time) to discuss the transaction. Individuals may find the presentation for the webcast on KBR’s website under the investor relations section. The live webcast can also be accessed in the United States/Canada at 1.888.430-8705 and outside the U.S. at +1.719.457.2727 with the passcode 4015382. A replay of the webcast will be available on KBR’s website for seven days after the call. Also, a replay may be accessed by telephone at +1.719.457.0820 or toll free at 1.888.203.1112, passcode 4015382.

About KBR, Inc.

KBR, Inc. is a global technology, engineering, procurement and construction company serving the hydrocarbons and government services industries, employing approximately 22,000 people worldwide with customers in more than 80 countries and operations in 40 countries across three distinct global businesses:

  • Technology & Consulting, including proprietary technology in refining, ethylene, ammonia and fertilizers, and gasification; and niche consulting and know-how through subsidiaries Granherne, Energo and GVA
  • Engineering & Construction, including Offshore Oil & Gas; Onshore Oil & Gas; LNG/GTL; Refining; Petrochemicals; Chemicals; differentiated EPC, and Industrial Services
  • Government Services, including program management and long term annuity contracts

KBR is proud to work with its customers across the globe to provide technology, value-added consulting services, integrated EPC delivery and Long Term Industrial Services to ensure consistent project delivery with predictable results.At KBR, we deliver.

Visit www.kbr.com

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