MergerTalk: Is Halliburton's KBR Unit a Tough Sell?

[seemslikeadream]

By Deepa Babington
NEW YORK (Reuters) - After battling everything from asbestos lawsuits to accusations of overcharging on Iraqi contracts, Halliburton Co.'s KBR unit may soon be up for sale.

Analysts say it's about time.

Sick of seeing its shares pay the price for KBR's woes, Halliburton last week said it may shed the engineering and construction business, which is embroiled in several probes and has attracted a seemingly endless stream of controversy.

The separation of KBR, formerly known as Kellogg Brown & Root, could take the form of a sale, an initial public offering or a spinoff. Speculation has also bubbled that Halliburton, the No. 2 oilfield services company, could even choose to retain some KBR units.

If completely divested, KBR would take its vaunted government service business with it, but would also remove a major millstone from Halliburton, which could then look to its higher-margin oilfield services business to propel its share price upward.

....

Fluor Corp., privately held Bechtel and other companies with strong government contracting businesses could be interested in picking up KBR, as could defense contractors, said A.G. Edwards analyst Poe Fratt.

Halliburton, headed by Vice President Dick Cheney from 1995 to 2000, said it would settle the asbestos litigation, a process it does not expect to complete until at least the end of the year, before deciding what to do with KBR.

more
http://www.reuters.com/newsArticle.jhtml?type=reutersEdge&storyID=6398076&pageNumber=0