KBR rocks quiet M&A market to buy a Chantilly government contractor
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Houston-based KBR Inc. (NYSE: KBR) made a big splash in what has been relatively placid mergers and acquisition waters, acquiring Chantilly-based Centauri LLC for $800 million in a deal announced Wednesday.

Formed last year from a combination of Integrity Applications Inc., Xebec Global and Dependable Global Solutions, Centauri had been focused in areas like cybersecurity, analytics and space asset services, but made a string of acquisitions itself in 2019 that also positioned it in directed energy and hypersonic weapons, among other markets.

Those acquisitions — which included Huntsville, Alabama-based Kord Technologies Inc. in September and a combination of Ohio companies PreTalen Ltd. and The Design Knowledge Co. (TDKC) in December — drew the eye of the Houston contracting giant, which has steadily shifted from its oil and gas engineering operations and focused on government services and technology businesses.

"KBR has undergone a deliberate, strategic transformation to be a provider of innovative, higher-end, digitally enabled solutions and technologies in attractive, stable domains," Stuart Bradie, KBR president and CEO, said in a statement. "The acquisition of Centauri firmly aligns with our strategy of increasing KBR's highly technical, mission-focused, synergistic capabilities and enduring customer relationships. We are excited to welcome and work closely with the Centauri team as we continually drive growth and value-creation for our shareholders and other stakeholders."

The move gives KBR a bigger foothold in the cybersecurity and missile defense markets alongside increased holdings in space and intelligence, two business arenas of immense opportunity.

Centauri CEO Dave Dzaran said the deal will help the local company advance its defense-focused businesses with greater scale.

When Bradie took over as CEO in 2014, some 80% of KBR’s business was in oil and gas, he told the Houston Business Journal last year. As of 2019, the government services segment accounted for about 70% of all of KBR.

As part of that increasing focus on its government business, KBR bought El Segundo, California-based Wyle Inc. and Columbia, Maryland-based Honeywell Technology Solutions Inc. for a combined $836 million in 2016. In February 2018, KBR announced a $355 million deal to buy Stinger Ghaffarian Technologies Inc., a Greenbelt, Maryland-based government contractor that specializes in NASA contracts.

Citizens Capital Markets Inc. served as lead M&A adviser to KBR in its Centauri deal, which is expected to close in the fourth quarter of 2020.

Bank of America served as co-adviser, and Arena Strategic Advisors served as due diligence and transition adviser. Hogan Lovells US LLP acted as legal adviser to KBR in connection with the transaction.

Holland & Knight acted as legal adviser to Centauri, and Jefferies LLC acted as Centauri's financial adviser in the deal.

Olivia Pulsinelli contributed to this report.


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