HOUSTON - KBR, Inc. (NYSE: NYSE:KBR), a global provider of science, technology, and engineering solutions, announced its plan to acquire LinQuest Corporation, a company specializing in engineering, data analytics, and digital integration for national security missions.
This strategic move aims to enhance KBR's offerings in technically differentiated services within the space, air dominance, and connected battlespace sectors.
LinQuest, recognized for its work with the U.S. Space Force, U.S. Air Force, and other defense and intelligence agencies, brings to KBR a portfolio of advanced technology solutions, including AI and machine learning capabilities. The acquisition is set to accelerate KBR's strategy to deliver high-end technology and expertise, aligning with the company's growth ambitions in the national security domain.
Stuart Bradie, KBR President and CEO, expressed enthusiasm for the acquisition, highlighting LinQuest's innovation and the synergy between the two companies' capabilities. He anticipates new opportunities for revenue growth resulting from the combined strengths of KBR and LinQuest.
The transaction, valued at $737 million, is expected to close later this year, subject to regulatory approvals. KBR plans to fund the purchase through cash and existing debt facilities. The deal is projected to be accretive to KBR's adjusted earnings per share, excluding amortization from purchased intangible assets and non-recurring transaction costs.
KBR's acquisition of LinQuest, which employs over 1,500 people, many with security clearances, is anticipated to bolster KBR's support for strategic U.S. government clients. With this move, KBR aims to better meet the evolving demands of the defense and national security sector.
The transaction has received unanimous approval from KBR's Board of Directors. Financial due diligence was provided by Arena Strategic Advisors, with Gibson, Dunn & Crutcher LLP serving as KBR's legal advisor. Baird acted as the exclusive financial advisor to LinQuest, with Kirkland & Ellis LLP as its legal advisor.
The information regarding this acquisition is based on a press release statement from KBR.
In other recent news, KBR, Inc., a global technology and engineering firm, has secured several notable contracts and received positive analyst outlooks.
The company was awarded an $82 million task order to support the United States Air Force's B-52 bombers, continuing its eight-year involvement with the B-52 program. KBR also secured a spot on a $43 billion military health contract to deliver health and wellness services to U.S. military personnel and their families. In addition, the firm was chosen for a $2 billion contract to support U.S. Navy facilities worldwide.
On the environmental front, KBR obtained a contract to provide a training simulator for OCI Global's Texas Blue Clean Ammonia facility, aimed at enhancing operational safety and efficiency. BofA Securities reiterated a Buy rating for KBR, citing its growth potential and setting an $80 stock price target.
Stifel, another analyst firm, raised the stock price target to $84 from $83, expressing confidence in KBR's growth outlook. These are recent developments that reflect KBR's strategic direction and potential for future performance.
InvestingPro Insights
In light of KBR's recent announcement to acquire LinQuest Corporation, investors and industry analysts are closely monitoring KBR's financial health and stock performance. According to InvestingPro data, KBR has a market capitalization of approximately $8.8 billion and has experienced a revenue growth of 7.9% over the last twelve months as of Q1 2024. This growth is indicative of KBR's expanding operations and may reflect the strategic benefits anticipated from the LinQuest acquisition.
KBR's forward-looking financials also show promise, with an adjusted P/E ratio for the last twelve months as of Q1 2024 sitting at 40.56. While this may suggest a premium valuation, the company's PEG ratio of 0.18 indicates potential for future earnings growth at a rate that could justify the current P/E ratio. Investors are also looking at KBR's gross profit margin of 13.86%, which, despite being on the lower side, could see improvement as the company integrates LinQuest's operations and leverages its advanced technology solutions.
For those considering KBR's stock, InvestingPro Tips highlight that the company has maintained dividend payments for 17 consecutive years and has raised its dividend for 4 consecutive years, signaling a commitment to returning value to shareholders. Additionally, analysts predict the company will be profitable this year, which could further enhance investor confidence in the wake of the acquisition. It's worth noting that KBR operates with a moderate level of debt, which may provide financial flexibility as it integrates LinQuest's business.
For more detailed analysis and additional InvestingPro Tips, investors can visit InvestingPro. There are currently 10 additional InvestingPro Tips available for KBR, offering insights into various aspects of the company's financial health and stock performance. Interested readers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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