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Industry Week in Review – July 6, 2012


Managing Director, KippsDeSanto & Co.

Posted on July 9th, 2012

Posted under: Industry Review, Mergers & Acquisitions

Following mishaps during a U.S. air raid last November, resulting in the death of 24 Pakistan soldiers, Pakistan has reopened its borders to NATO supply convoys serving Afghanistan. The seven-month blockade of essential supply routes increased already heightened tensions between both countries and forced the U.S. and its allies to rely on longer and more expensive routes through Asia, Russia, and the Caucasus.

The lift comes as a relief to both countries, as well as their respective NATO allies. Pakistan’s new prime minster, Raja Pervez Arshaf, acknowledged that continuation of the blockade would damage relations with the U.S. and other NATO states. Similarly, the U.S. and its NATO allies have indicated the supply routes are essential for the planned withdrawal of combat forces from Afghanistan through 2014. The move has received positive reception from political leaders, who say it is a commitment to improving relations and securing a brighter future for both Afghanistan and the region at large.

The blockade was costing the U.S. military roughly $100 million a month.

Big Movers

GKN plc (Up 13.2%) – Shares traded upward this week after the Company announced it would acquire Volvo Aero, the aero-engine manufacturing division of Volvo AB, for £633 million ($987 million).

Safran SA (Down 6.4%) – Shares traded downward this week after the Company agreed to form a 50/50 joint venture with MTU Aero Engines under the name AES Aerospace Embedded Solutions GmbH.

Relevant Transactions

Teledyne Technologies Inc. acquired BlueView Technologies Inc., a provider of compact forward-looking imaging sonar, microbathymetry systems, and 3D scanning sonar. The acquisition will add new technology and products to Teledyne’s marine group and increase instrumentation content on autonomous underwater vehicles and remotely operated underwater vehicles used in marine survey applications. The terms of the deal were not disclosed.

GKN plc to acquire Volvo’s Aerospace Division, the aircraft-engine unit of Volvo that produces components for aircraft, rocket, and gas turbine engines, for £633 million ($987 million). The acquisition will allow GKN to broaden its product range with engine components and expand its presence in the fast-growing civil aircraft sector.

Precision Castparts Corp. to acquire Klune Industries, a manufacturer of complex aluminum, nickel, titanium, and steel aerostructures. The acquisition will allow Precision Castparts to continue expansion into the widely fragmented aerostructures market with increased sheet metal and fabrication capabilities. The terms of the deal were not disclosed.

ITT Exelis acquired Space Computer Corporation, a producer of real time signal processing systems, software, and algorithms for the exploitation of hyperspectral sensor data. The acquisition will allow Exelis to address the challenge of data processing that has been an area of concern for the military, intelligence community, and existing customers. The terms of the deal were not disclosed.

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    Robert D. Kipps

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