Benzinga | Aug 13, 2021 12:55PM EDT

KBR To Acquire Frazer-Nash Consultancy For $400M

* KBR, Inc. (NYSE:KBR) has entered into a definitive agreement with Babcock International Group PLC (OTC:BCKIF) to acquire Frazer-Nash Consultancy Limited, a provider of systems engineering, assurance, and technology advisory services, for ~$400 million in cash.

* Frazer-Nash delivers high-end systems engineering, systems assurance, and technology to solve complex challenges.

* KBR expects the acquisition to realign its portfolio and cost structure in the U.K. With modest revenue and cost synergies, the purchase price multiple is ~12X adjusted 2022 EBITDA.

* Frazer-Nash's revenue outlook for FY22 is $150 million to $170 million with adjusted EBITDA margins in the upper-teens and strong free cash flow generation.

* KBR expects the Frazer-Nash acquisition to be ~$0.10 accretive to adjusted EPS in FY22.

* Frazer-Nash will become part of KBR's Government Solutions segment.

* KBR targets to close the acquisition in the third or fourth quarter of 2021.

* KBR to fund the purchase price with ~$175 million of international cash on hand and $225 million of debt. It held $483 million in cash and cash equivalents as of June 30, 2021.

* Price Action: KBR shares are lower by 0.07% at $39.35 on the last check Friday.