Irenic takes a position at KBR. Here’s how the activist may help improve shareholder value

KBR provides scientific, technology and engineering solutions to governments and companies.

The company operates through two segments: Government Solutions and Sustainable Technology Solutions .

Irenic Capital is urging management to separate its STS segment from its Government Solutions segment.

KBR trades around 11.5 times the value of STS , but those most like STS fetch an average of 14-15 times EBITDA.

Separating the two should re-rate the STS business creating value for shareholders before any cost savings from the separation.

By separating the two businesses, there would be no need for a lot of the corporate costs the company presently incurs.

Separation could result in a $50 million savings that goes right to the bottom line.