KBR to Acquire BE&K for $550M

KBR, a Houston-based global engineering, construction and services company, has announced that it will acquire BE&K Inc., a privately held, Birmingham, Ala.–based engineering, construction and maintenance services company, in a transaction valued at $550 million.The closing is scheduled for July, subject to regulatory approval. A conference call this morning reported that BE&K had revenues of approximately $2.0 billion in the year ended March 30, 2008, with a backlog of a similar amount. The company ranks in the top 10 for food processing plant contracting and chemical plant contracting, among other areas, according to Engineering News-Record magazine. ENR also ranked BE&K as the 39th largest design firm and the 48th largest contractor in 2007. The conference call also noted that the acquisition complements KBR’s Gulf Coast presence with BE&K’s footprint in the Southeast. BE&K also has offices in Poland and Russia, while KBR has offices in the United Kingdom, Australia and Singapore. Robert Cassidy, editor in chief of Building Design & Construction magazine, told CPN that while mergers and acquisitions have been reasonably common on the design side recently, such consolidations are noticeably less common on the construction side. He attributes this, at least in part, to the fact that “It’s a bigger bite,” since the companies are on average so much larger. Formerly a Halliburton subsidiary known as Kellogg Brown & Root Inc., and with origins going back to 1901, KBR was spun off as a separate company again in April 2007. It employs more than 50,000 people and is currently the largest contractor for the U.S. Army and a top-10 contractor for the U.S. Department of Defense.