We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
KBR to Acquire Frazer-Nash, Boost International Presence
Read MoreHide Full Article
KBR, Inc. ((KBR - Free Report) ) has inked a deal with Babcock International Group PLC to take over Frazer-Nash Consultancy Limited. This all-cash transaction is valued at $400 million. Frazer-Nash will be part of KBR's Government Solutions segment post the deal completion, which is expected in the third or fourth quarter of 2021. Share price of KBR gained a meager 0.05% on Aug 13, 2021.
Frazer-Nash provides systems engineering, assurance and technology advisory services, with proficiency in areas like systems engineering, data science, cyber as well as clean energy. Its team provides a wide array of professional advisory services across the defense, energy and critical infrastructure sectors mainly in the U.K. and Australia. Hence, this buyout will help KBR meet global priorities with minimal overlap, owing to its geographic footprint.
KBR president and chief executive officer, Stuart Bradie, said, “This acquisition is a continuation of our strategic journey to advance upmarket to deliver innovative, digitally-enabled solutions to governments and customers around the world."
Buyout Synergies
The Frazer-Nash buyout will enable KBR to realign portfolio and cost structure in the U.K., with modest revenue and cost synergies. Frazer-Nash expects revenues for fiscal 2022 within $150-$170 million, with adjusted EBITDA margins in upper teens and strong free cash flow generation. Revenue CAGR is expected to be in line with the long-term target for KBR’s Government Solutions business of 5-8%.
The company expects the Frazer-Nash acquisition to be about 10 cents accretive to adjusted EPS in fiscal 2022.
It expects to fund the $400-million transaction with $175 million of international cash on hand and $225 million of debt.
KBR’s Inorganic Drive
KBR has a penchant for acquisitions and strategic alliances for bolstering inorganic growth as well as expanding market share. In October 2020, it acquired Centauri, LLC, a leading independent provider of high-end space, directed energy and other advanced technology solutions. This acquisition, which builds on its already strong cybersecurity and missile defense solutions, significantly expanded KBR's military space and intelligence businesses.
On Mar 6, 2020, the company acquired certain assets and assumed liabilities of Scientific Management Associates Pty Ltd.’s government defence business to enhance its position as a provider of high-end technical training to the Australian Armed Forces and Navy. The acquired business provides technical training services to the Royal Australian Navy. The acquisition was part of its Government Solutions unit.
Share Price Performance
Image Source: Zacks Investment Research
KBR’s shares have gained 27.4% in the year-to-date period, marginally outperforming the Zacks Engineering - R and D Services industry’s 24.9% growth. KBR’s solid prospects are backed by continuous contract wins, strong project execution, backlog level, and potential government as well as technology businesses. As of Jun 30, 2021, total backlog was $19.9 billion compared with $19 billion at 2020-end. Of the total backlog, Government Solutions booked $12.4 billion. The Sustainable Technology Solutions segment accounted for $2.5 billion of the total backlog.
Overall, KBR — which shares space with AECOM (ACM - Free Report) , Jacobs Engineering Group Inc. (J - Free Report) and Quanta Services Inc. (PWR - Free Report) in the same industry — has been driving growth by focusing on lowering emissions, product diversification, energy efficiency, and more sustainable technologies as well as solutions.
Image: Bigstock
KBR to Acquire Frazer-Nash, Boost International Presence
KBR, Inc. ((KBR - Free Report) ) has inked a deal with Babcock International Group PLC to take over Frazer-Nash Consultancy Limited. This all-cash transaction is valued at $400 million. Frazer-Nash will be part of KBR's Government Solutions segment post the deal completion, which is expected in the third or fourth quarter of 2021. Share price of KBR gained a meager 0.05% on Aug 13, 2021.
Frazer-Nash provides systems engineering, assurance and technology advisory services, with proficiency in areas like systems engineering, data science, cyber as well as clean energy. Its team provides a wide array of professional advisory services across the defense, energy and critical infrastructure sectors mainly in the U.K. and Australia. Hence, this buyout will help KBR meet global priorities with minimal overlap, owing to its geographic footprint.
KBR president and chief executive officer, Stuart Bradie, said, “This acquisition is a continuation of our strategic journey to advance upmarket to deliver innovative, digitally-enabled solutions to governments and customers around the world."
Buyout Synergies
The Frazer-Nash buyout will enable KBR to realign portfolio and cost structure in the U.K., with modest revenue and cost synergies. Frazer-Nash expects revenues for fiscal 2022 within $150-$170 million, with adjusted EBITDA margins in upper teens and strong free cash flow generation. Revenue CAGR is expected to be in line with the long-term target for KBR’s Government Solutions business of 5-8%.
The company expects the Frazer-Nash acquisition to be about 10 cents accretive to adjusted EPS in fiscal 2022.
It expects to fund the $400-million transaction with $175 million of international cash on hand and $225 million of debt.
KBR’s Inorganic Drive
KBR has a penchant for acquisitions and strategic alliances for bolstering inorganic growth as well as expanding market share. In October 2020, it acquired Centauri, LLC, a leading independent provider of high-end space, directed energy and other advanced technology solutions. This acquisition, which builds on its already strong cybersecurity and missile defense solutions, significantly expanded KBR's military space and intelligence businesses.
On Mar 6, 2020, the company acquired certain assets and assumed liabilities of Scientific Management Associates Pty Ltd.’s government defence business to enhance its position as a provider of high-end technical training to the Australian Armed Forces and Navy. The acquired business provides technical training services to the Royal Australian Navy. The acquisition was part of its Government Solutions unit.
Share Price Performance
Image Source: Zacks Investment Research
KBR’s shares have gained 27.4% in the year-to-date period, marginally outperforming the Zacks Engineering - R and D Services industry’s 24.9% growth. KBR’s solid prospects are backed by continuous contract wins, strong project execution, backlog level, and potential government as well as technology businesses. As of Jun 30, 2021, total backlog was $19.9 billion compared with $19 billion at 2020-end. Of the total backlog, Government Solutions booked $12.4 billion. The Sustainable Technology Solutions segment accounted for $2.5 billion of the total backlog.
Overall, KBR — which shares space with AECOM (ACM - Free Report) , Jacobs Engineering Group Inc. (J - Free Report) and Quanta Services Inc. (PWR - Free Report) in the same industry — has been driving growth by focusing on lowering emissions, product diversification, energy efficiency, and more sustainable technologies as well as solutions.
The Zacks Consensus Estimate for the Zacks Rank #2 (Buy) company’s 2021 earnings indicates a 23.7% increase from 2020. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.