Engineering contractor KBR to spin off mission technology solutions unit

By Aatreyee Dasgupta

(Reuters) -Engineering contractor KBR said on Wednesday it is pursuing a tax-free spin-off of its mission technology solutions (MTS) segment, which serves military and other government agencies.

Shares of the Houston, Texas-based company rose nearly 4% in Wednesday trading.

The company said CFO Mark Sopp will transition into a newly created role to oversee the team responsible for spinning off MTS. Sopp will be succeeded by Shad Evans, the current senior vice president of financial operations.

KBR is aiming to complete the spin-off by mid-to-late 2026.

Activist investors have been pushing companies to simplify corporate structures and shed underperforming or non-core divisions.

Last year, investor Irenic Capital Management built a more than 1% stake in KBR and said it plans to push for a separation of the company's segments, according to a Wall Street Journal report.

This development comes as the MTS business faced uncertainty stemming from shifting priorities in the public sector and tariff pressures.

In June, KBR announced the cancellation of the U.S. Defense Department's U.S. Transportation Command household goods contract, awarded to a KBR-led joint venture, aimed at improving relocation for military families.

KBR's Wednesday announcement adds to a series of corporate divestitures as U.S. companies work to shore up shareholder value amid geopolitical uncertainties and a tough supply chain environment.

After the split, KBR will continue to operate its remaining sustainable technology solutions (STS) business, which focuses on energy transition and emissions reduction.

"We like that the new KBR (STS) could trade for a 7-11 times premium from current company levels, and we expect minimal contract overlap and stranded costs," analysts said in a Truist Securities note.

(Reporting by Aatreyee Dasgupta in Bengaluru; Editing by Shreya Biswas and Mohammed Safi Shamsi)