Dive Brief:
- Houston-based contracting and engineering behemoth KBR Inc. announced Monday that it will purchase government contractor Wyle Inc. for $570 million, the Houston Business Journal reported.
- KBR said Wyle will keep its existing structure — and 3,800 employees — and will serve as an addition to KBR's existing government services unit, creating "the equivalent of a global $2 billion government services organization," KBR CEO Stuart Bradie said in a release.
- This acquisition fits in with the KBR CEO's stated goal of reducing its overall number of divisions from 16 to five but growing its hydrocarbons and international government services businesses.
Dive Insight:
Wyle had a $440 million funded backlog of various government research, engineering and aviation projects at the end of 2015, with another unfunded $1.1 billion scheduled, according to the Business Journal. KBR will finance the purchase with $200 million cash and an existing line of credit.
In November, as part of its shedding of superfluous business units, KBR sold its transportation, water utility and aviation division — Infrastructure Americas — to Stantec for $19 million. KBR has also sold its building and power plant division and formed a joint venture with Bernhard Capital partners to handle its construction business.
KBR ranked 16th on the Engineering News-Record's newest list of the nation's Top 400 contractors — down from the 12th spot in 2015.
Prior to the sale of Infrastructure Americas, the U.S. Department of Defense ordered KBR to pay the government $108,000 for accepting subcontractor gifts while under a Logistics Civil Augmentation Program (LOGCAP III) contract. The DoD alleged that KBR employees "improperly" accepted gifts like dinners and golf trips from subcontractors who had previously settled claims for kickback violations.