Street Calls of the Week
HOUSTON - KBR, Inc. (NYSE:KBR), a $6.16 billion government services and technology solutions provider currently trading below its InvestingPro Fair Value, announced Wednesday its board of directors has unanimously approved a plan to pursue a tax-free spin-off of its Mission Technology Solutions (MTS) segment, creating two independent, publicly traded companies by mid-to-late 2026.
The transaction aims to create two focused entities: New KBR will retain the Sustainable Technology Solutions business, while SpinCo will comprise the Mission Technology Solutions segment focused on government services. The decision comes as KBR demonstrates strong financial performance, with revenue growth of 12.31% and a healthy P/E ratio of 15.78.
"Today’s announcement of our plan to spin off MTS and form two pure-play companies marks a major milestone and pivotal step in KBR’s evolution to unlock the next phase of value creation," said Stuart Bradie, KBR Chair, President, and Chief Executive Officer.
Following the separation, Bradie will continue as New KBR Chair, President, and CEO. Mark Sopp, current Executive VP and CFO, will transition to lead the spin-off team. Shad Evans, currently SVP of Financial Operations, will become KBR’s CFO effective January 5, 2026, and assume the same role at New KBR post-spin.
New KBR will focus on delivering proprietary process technologies across ammonia/syngas, chemical/petrochemicals, clean refining, and circular economy markets. The company currently offers more than 85 process technologies globally.
SpinCo will continue serving government clients in national security and space sectors, leveraging its existing contracts and domain expertise.
The transaction is subject to final board approval, favorable tax opinions, SEC Form 10 registration statement effectiveness, and other regulatory approvals.
KBR reaffirmed its fiscal year 2025 outlook in the press release statement. The company currently employs approximately 37,000 people worldwide with operations in over 29 countries.
Goldman Sachs & Co. LLC is serving as financial advisor to KBR on the transaction.
In other recent news, KBR has secured a significant $2.46 billion contract with NASA to support astronaut health and research for future space missions. This contract, which begins on November 1, could potentially extend through 2035, increasing its total value to $3.6 billion. Additionally, KBR has been awarded $175 million in contracts from the Air Force Research Laboratory for defense technology development over a five-year period. Meanwhile, S&P Global Ratings has revised its outlook on KBR to negative from stable, citing weaker-than-expected credit metrics. The rating agency expects KBR’s funds from operations to debt ratio to be lower than previously forecasted in the coming years.
BofA Securities has downgraded KBR from Buy to Neutral, following the Department of Defense’s cancellation of a $20 billion contract that was anticipated to drive growth. In other developments, KBR and Axiom Space have completed successful underwater tests of a new lunar spacesuit at NASA’s Neutral Buoyancy Laboratory. These tests are part of preparations for NASA’s Artemis III mission to the Moon.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.