KBR, Inc. [KBR] on Friday said it has agreed to acquire Stinger Ghaffarian Technologies, Inc. (SGT) in a $355 million deal that will expand its support for the federal government, and position it as a top tier services contractor at NASA.
The deal is expected to close in early April. KBR said the acquisition will be accretive to its adjusted earnings in the first full year after it closes. SGT has about $500 million in annual sales and KBR expects revenue synergies of $100 million by 2021.
KBR said it will make SGT a business unit within its KBRwyle division while maintaining SGT’s management structure.
SGT, which is based in Maryland, provides technology solutions, engineering services, mission operations, scientific and IT software solutions to government customers. Its key customers are NASA, the National Oceanic and Atmospheric Administration, the U.S. Geological Survey, and the Department of Transportation. It also contracts with the Navy and has contract vehicles with the Army and the General Services Administration’s Alliant contract.
KBR said the acquisition “solidifies KBRwyle’s position as an established leader in human space exploration and opens up significant new opportunities in both civil and military space” and also bolsters its “support for strategic clients and enhance our position for opportunities in the national security and commercial space markets.”
KBR also said the acquisition will help it recapture Air Force space support programs.
KBR acquired the former Wyle, Inc., in 2016, a $570 million deal that expanded its government services business to around $1.5 billion in sales. Wyle’s primary customers at the time were the Army, Navy and NASA. KBR followed up that acquisition later in in 2016 for Honeywell’s [HON] Technology Solutions, Inc. business unit, in a $300 million purchase that added another $600 million in annual revenue.
In conjunction with the SGT announcement, KBR last Friday also reported financial results for 2017, including $2.2 billion in sales in its Government Services segment, which KBRwyle is part of.
“With our combined best in class capabilities and shared position for innovation and performance, we can capitalize on revenue synergies in a market with strong fundamentals,” Stuart Bradie, president and CEO of KBR, said in a statement regarding the pending acquisition of SGT.
SGT has about 2,500 employees, 85 percent of which are based at client facilities, and is only one of two companies in the U.S. and is the 22nd in the world to hold the CMMI Institutes Capability Maturity Model Integration Level 5 for Development and Services, which will help KBR in engineering around mission IT. CMMI is used to guide process improvement.
The acquisition has been approved by KBR’s board and must still be approved by U.S. regulators.