With the trainwreck that is 2020 almost in our rearview mirror, the year is ending with a flurry of defense-related mergers and acquisitions, including a handful of notable deals announced just this week.
Aerospace and defense “companies could also pursue M&A opportunities to build scale and capture greater value,” consulting firm Deloitte said in a new report. “Long-term growth prospects for the A&D industry remain strong. The space sector, together with technological developments such as advanced air mobility, hypersonics, electric propulsion and hydrogen-powered aircraft, are likely to drive future growth for the industry.”
Pure defense companies with little commercial aerospace business — think Lockheed Martin and Northrop Grumman — have been able to better withstand the pandemic, which has depressed passenger air travel and left airlines strapped for cash. As we enter 2021, we’ll be watching whether the pure defense companies go shopping and whether those with mixed commercial portfolios start selling.
Here’s the latest M&A activity:
- South Korea’s Hyundai has reportedly purchased Boston Dynamics, the robot-making company behind DARPA’s “Big Dog” from owner SoftBank. (The company is featured in this extremely funny YouTube video.) The deal is reportedly worth $917 million, Engadget reports.
- FLIR Systems acquired small Gainesville, Florida-based drone maker Altavian. Altavian’s drones “integrate multiple sensors, including FLIR thermal technology, to provide users with decision support and intelligence, surveillance, and reconnaissance (ISR) capability,” FLIR said in a statement.
- Mercury Systems said on Monday that it would acquire Physical Optics in an all-cash deal worth $310 million. Mercury bills Physical Opticas a “leading designer, developer, and integrator of advanced technologies primarily focused on avionics & mission subsystems for defense applications.”
- Northrop Grumman said it would divest its information technology business to Peraton for $3.4 billion. The sale is expected to close in the first half of 2021, Northrop said.
- BAE Systems sold subsidiary SIlverSky to a private equity group led by Richard Dobrow and Cary Conrad.
- Leidos on Thursday announced that it would acquire 1901 Group, an IT services and cloud company. “The acquisition of 1901 Group will advance Leidos’ position in the digital modernization market and expand its ability to address the accelerating cloud and IT services markets,” Leidos said in a statement.
- Silicon Valley artificial intelligence firm C3.ai — which is behind numerous U.S. military AI projects —went public on Wednesday. “C3.ai stock zoomed 120.2% Wednesday, and jumped another 26%, near 116.50, during morning trading on the stock market today,” according to Investors Business Daily.
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