Cubic Corp. headquarters in Kearny Mesa. Courtesy Cubic
Defense Business Brief: Still no skinny budget; M&A drama, Space threats and more.
The week has come (and almost) gone and still no “skinny budget” from the Biden administration. The rollout of President Biden’s $2 trillion infrastructure bill this week prompted the delay, Punchbowl News reports.
Still, that’s not stopping Republican posturing for more military funding. Biden is expected to ask Congress to approve a defense budget between $704 and $708 billion, which is basically the same as the Pentagon has in its coffers this year.
Sen. Jim Inhofe, R-Okla., the ranking member of the Senate Armed Services Committee, called in a Newsweek piece for increased defense spending to counter increased Chinese military spending. “Beijing...talked a big game at the first bilateral showdown in Anchorage two weeks ago—but has backed that talk up by increasing the PLA defense budget by 6.8 percent this year. If the United States responds with a budget cut instead of a corresponding investment, it would send a terrible signal to Beijing.”
There’s some drama on the mergers and acquisition front. It all began on March 22 when Singapore’s ST Engineering said it wanted to buy Cubic, the San Diego-based military training and public transportation firm, for $76 per share. One problem: in February, private equity firms Veritas and Evergreen agreed to buy Cubic for about $2.2 billion, or $70 per share. Cubic responded that while its deal with Veritas and Evergreen remained in place, it would evaluate the ST Engineering proposal. On March 30, ST Engineering upped its offer to $78 per share. Finally on March 31, Cubic said it had accepted an updated offer of $75 per share from Veritas and Evergreen. The total value of the sale is now $3 billion, about $200 million more from the original deal in February. “[W]e continue to believe [our our offer] is compelling,” ST Engineering said in a March 31 statement that said discussions with Cubic had been terminated.
M&A bonus round. Defense technology company Anduril Industries announced Thursday that it has acquired Area-I, a company that makes tube-launched drones. Terms of the deal were not disclosed.
M&A bonus round 2. Elbit acquired BAE Systems Rokar International—maker of high-end, military GPS receivers and guidance systems—from BAE Systems Inc. for $31 million.
Weekend reading. A new assessment of space threats from the Center for Strategic and International Studies. “This year’s report highlights recent developments in counterspace weapons by Russian, China, Iran, North Korea, and others,” writes co-author Todd Harrison. “Russia was the most active in testing anti-satellite weapons over the past year, including tests of a space-based weapon that appears to be capable of firing projectiles at other satellites.” Read it all here.
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