On Tuesday, President Obama lifted a freeze on arms transactions with Egypt, marking a significant step towards repairing relations with the Middle East nation during a period of regional instability. The decision to remove the arms freeze, which had been in place since October 2013, provides an additional source of foreign military sales for American weapons manufacturers that have faced defense spending caps and budget cuts domestically.
RBC Bearings Incorporated demonstrated its commitment to growth this week with its acquisition of Dover’s Sargent Aerospace & Defense business, a precision-engineered manufacturer for commercial aerospace and military programs. The transaction, valued at $500 million, was viewed positively by the market as its stock price jumped significantly since announcement on March 26th.
Finmeccanica CEO Mauro Moretti announced that the Company will delay its decision regarding the potential sale of its U.S. subsidiary, DRS Technologies. Initial discussions around a sale of DRS began last summer. More recently, Moretti said the Company was seeking a partner to help run the unit, while divesting DRS’s Aviation and Logistics unit and its Training Communications and Network solutions unit.
Strategic Drivers of M&A in the Middle Market, Part 2: The Perils and Opportunity of Middle Market Contracting
As mentioned in the most recent blog in this series, we continue to witness the growing prevalence of middle market acquisitions and “mini-mergers.” A key driver of this phenomenon is the increasingly divided nature of today’s contracting markets. More specifically, the flow of funding dollars can be classified into three areas – (i) the small business / set-aside procurement environment; (ii) the landscape for large contracts and IDIQs that is dictated by large defense prime contractors and system integrators; and (iii) the middle market, for firms generally over $50 million in revenue that no longer qualify for set aside programs.
This week, United Technology Corporation’s CEO, Greg Hayes announced that the Company has begun to consider strategic alternatives including an outright spin-off, for its Sikorsky subsidiary. The helicopter manufacturer has experienced years of inconsistent revenues and has dim prospects for future revenue growth.
Boeing Chief Financial Officer, Greg Smith offered a strong rebuttal to investor concern over aircraft demand this past week at the J.P. Morgan Aviation, Transportation, & Industrials Conference.
On Monday, AAR Corp. announced that it has reached an agreement with TransDigm Group Incorporated to sell its Telair Cargo Group, comprised of Telair International, Telair U.S., and Nordisk Aviation Products.
Earlier this week, the U.S. State Department announced that it will begin to allow the sale of armed unmanned aircraft systems (“UAS”) to foreign militaries. The new policy comes as the Obama administration has embraced a strategy of training and equipping its international allies.