Business

August 2, 2013

China deal drives merger, acquisition activity in second quarter

Aerospace and defense merger and acquisition activity in the United States continues to be affected by sequestration and defense budget cuts in the second quarter of 2013.

However, China played a positive role in the deal market where the pace of Chinese-involved deals has increased year-to-date, according to PwC US.

In the two years since sequestration became law, there has been a lot of uncertainty, creating a soft deal market, particularly in U.S. defense merger and acquisition activity,î said Scott Thompson, PwCís U.S. aerospace & defense leader. ìHowever, we are starting to see a slight uptick in interest from U.S. defense companies. It will likely still be slow in terms of holistic defense M&A activity, but once the 2014 U.S. defense budget is set, it will provide more certainty and we may start to see increased momentum in deal making.

Deal volume remained consistent in the first two quarters of 2013, with both periods recording 12 deals worth more than $50 million. Deal value increased to $4.1 billion during the second quarter of 2013, compared to $1.9 billion in the first quarter of 2013. This increase in deal value was the result of one Chinese mega deal (worth more than $1 billion) in the second quarter of 2013 ñ the first mega deal of the year ñ that had a total value of $1.5 billion. However, the annualized rate of deal value is only slightly more than half the 10-year trailing average.

In the first half of 2013, there were 11 U.S. deals worth more than $50 million with a total value of
$2.5 billion, compared to six Asia & Oceania deals totaling $2.6 billion, three of which were Chinese local deals representing $1.8 billion. ìChina is continuing to increase funding for engine R&D and reduce dependence on foreign engine technology by prioritizing domestic development. This engine R&D consolidation is leading to an increase in Chinese deal activity as the nation is trying to move ahead domestically in this sector,î continued Thompson.

Aerospace also continues to lead M&A activity as the defense sector awaits for some more guidance. So far in 2013, there were 17 aerospace deals worth more than $50 million with a total value of $4.2 billion, compared to four defense deals totaling $1.3 billion. The number of aerospace deals announced in 2013 is on pace to rank the highest of any annual total since 2000, although deal value continues to be soft.

While we saw strategic investors dominate the A&D M&A market during the second quarter, weíre starting to see financial investors slowly ramping up their interest in A&D deal making,î said Thompson. They are interested in the aerospace market, but are also showing some interest on the defense side where theyíll look to buy when the opportunity arises. There are still a lot of questions, but weíre seeing some optimism and interest in wanting to do deals ñ itís just a matter of seeing the right assets come up.




All of this week's top headlines to your email every Friday.


 
 

 

Lockheed Martin teams with Roketsan of Turkey on new standoff missile for F-35

Roketsan and Lockheed Martin signed a teaming agreement Oct. 22 for collaboration on the SOM-J, a new generation air-to-surface Standoff Cruise Missile for the F-35 Lightning II. The SOM system is an autonomous, long-range, low-observable, all-weather, precision air-to-surface cruise missile. The SOM-J variant is tailored for internal carriage on the F-35 aircraft. The companies will...
 
 
boeing-777-facility2

Boeing celebrates groundbreaking for 777X composite wing center

  Investment of more than $1 billion will sustain thousands of Puget Sound jobs Boeing Oct. 21 celebrated the groundbreaking of its new 777X Composite Wing Center at the Everett, Wash., campus. Permitting for the new 1-mil...
 
 

Northrop Grumman to supply new attitude, heading reference system for Airbus helicopters

Northrop Grumman has been selected by Airbus Helicopters to certify and deliver its new LCR-350 Attitude and Heading Reference System for several helicopter platforms. Developed by Northrop Grumman’s subsidiary in Germany, Northrop Grumman LITEF, the LCR-350 AHRS can be used in civil and military applications on rotary- and fixed-wing platforms, providing critical flight control data...
 

 
dassault

Dassault Falcon Jet establishes new pilot operational support team

Arnaud Paulmier, head of Dassault Falcon Jet’s new operational support team. Dassault Falcon Jet recently established a new Pilot Operational Support Team in Teterboro, N.J., to support operators in the Western Hemisphere. Th...
 
 

U.S. Navy awards Raytheon $49.5 million enhanced Laser Maverick production contract

The U.S. Navy has awarded Raytheon a $49.5 million contract for production of new laser-guided Maverick missiles (AGM-65E2/L). The Navy also intends to exercise a contract option to purchase additional units bringing the total contract value to $54.9 million. The Maverick weapon system, a U.S. Air Force-led joint service program, is a forward firing, precision-guided,...
 
 
Northrop Grumman photograph by Alan Radecki

Second Northrop Grumman-built Triton UAS completes first flight

Northrop Grumman photograph by Alan Radecki The second MQ-4C Triton, built by Northrop Grumman for the U.S. Navy, successfully completed its first flight Oct. 15 PALMDALE, Calif. – The U.S. Navy’s second MQ-4C Triton un...
 




0 Comments


Be the first to comment!


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>