KBR plans spinoff of government business

KBR’s board of directors has approved a plan to spinoff its government services segment following a multi-year strategy to build up that part of the business.

The unit currently called Mission Technology Solutions is poised to become a new, independent publicly-traded company by mid-to-late 2026 under the plan unveiled Wednesday.

As of the second quarter’s end, KBR pegs the MTS business at roughly $5.8 billion in revenue over the trailing 12-month period and a workforce of approximately 20,000 people. That translates to around 72% of overall corporate sales and 64% of the employee base.

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Over the past decade, KBR used multiple acquisitions to reinvent its government services business from being primarily focused on overseas work to one centered around technology and engineering services in the U.S.

Logistics and other readiness-related programs remained core for KBR, which prioritized space and science as franchise areas to grow in as part of the larger reinvention. KBR also worked to expand its footing in defense technology and certain international markets, such as the U.K. and Australia.

Roughly two-thirds of KBR’s global government revenue mix is in the U.S. market, according to the company’s investor presentation on the spinoff plan. KBR also estimates the government business’ profit margin at roughly 10% adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), again as of the second quarter’s end.

With this plan in place, KBR becomes the newest engineering-and-construction company to shed the bulk of a government business after multiple years of building it up.

Jacobs did the same in 2024 when its federal-facing units separated and merged into Amentum, which itself was created in 2020 via a carveout transaction from then-parent AECOM.

After the split completes, KBR will continue to operate its sustainable technology solutions business that focuses on energy transition and emissions reduction.

Mark Sopp, KBR’s chief financial officer for the past eight years, will shift over to a newly-created leadership role over the team responsible for spinning off MTS.

KBR’s chief executive Stuart Bradie will lead what is being called “New KBR” as CEO after the spin completes. Shad Evans, senior vice president of financial operations, will succeed Sopp as CFO and remain in the post at KBR post-spin.

The KBR board has hired an executive search firm to identify and hire a CEO for the future government services company.

Goldman Sachs & Co. LLC is acting as financial adviser to KBR, whose legal advisers are Wilmer Cutler Pickering Hale and Dorr LLP and Baker & McKenzie LLP. Corbin Advisors is working with KBR on the transaction’s strategic investor relations aspects.