Artist's conception of a hypersonic Air Force One.

Artist's conception of a hypersonic Air Force One. Hermeus

Defense Business Brief: M&A falls in 2020; Hypersonic planemaker secures factory; GM Defense names new president and more.

The number of defense and aerospace sector mergers and acquisitions in North America fell 32 percent in 2020, largely due to the coronavirus pandemic, according to a new report from Capstone Partners, an investment banking firm. Meanwhile, the value of the M&A deals that did happen were down 85 percent. Still, M&A activity rebounded in the fourth quarter of 2020.

“Many M&A transactions are being driven by the maturation of key technologies nearing their Initial Operating Capability (IOC) stage, such as hypersonic propulsion, swarm technology, and Artificial Intelligence, which can be developed faster and less expensively than by prime contractors,” the report said.

What else drove aerospace and defense M&A? “[C]ompanies are seeking to move up the value chain by acquiring embedded systems, such as avionics, onboard fielded airborne and land platforms.” Large defense companies are increasing their space businesses, which private equity is also interested in, the report said.

“Going forward, even in a flat defense budget environment over the next several years in the Biden Administration, we expect further acquisitions in key growth areas such as space, C4ISR, missile systems, and unmanned technologies,” the report said.

Also on the M&A front: Peraton completed its $7.1 billion acquisition of Perspecta, while AeroVironment completed its $45 million acquisition of German robotics firm Telerob. 

Hypersonic startup Hermeus secured a 110,000-sq.-ft. factory in Atlanta where it plans to build hypersonic aircraft that could fly from New York to London in 90 minutes. The company is exploring ways the U.S. Air Force could use its plane to transport high-ranking government officials.

GM Defense opened a new factory in Concord, North Carolina, where it will build new Infantry Squad Vehicles for the Army. The company also announced it has named Steve duMont, a former Raytheon executive, as its new president.

Making Moves

Lockheed Martin has named Christian Marrone senior vice president of government affairs, replacing Robert Rangel, who will retire later this year. Marrone, who is vice president of Lockheed’s government affairs office, served as top aide to former Homeland Security Secretary Jeh Johnson and former Defense Secretary Robert Gates.

From Defense One

Nobody Wants Rules in Space // Patrick Tucker

As space becomes more crowded, there's little hope for new international rules to make it safer.

'A Lot of Risk' in Army's Proposed 2022 Budget, Service Leaders Say // Caitlin M. Kenney

As details remain under wraps, lawmakers fret about possible cuts.

US Marines May Have Lost Their 'Amphibious Edge,' Leaders Say // Elizabeth Howe

Top Marines tell Congress that after deadly AAV accident and years in Middle East, the Corps and its vehicles are unprepared for waterborne operations.

US Air Force, Navy Extend 50% Work-From-Home Indefinitely // Marcus Weisgerber and Tara Copp

New memos suggest office space occupancy may never return to 100 percent.

Proposed Space National Guard Gathers Momentum // Jacqueline Feldscher

A space-focused branch of the Guard would aim to give the Space Force "a surge-to-war capability" in times of conflict.

America Can Beat China in Space with Safe Nuclear Propulsion // Gregory Pejic

A reactor that heats up and expels non-radioactive gas promises unprecedented mobility in orbit.

What's In Biden's First Budget? And How Late Will It Be? // Marcus Weisgerber

The White House could submit its defense budget request later than any administration in at least a century.

Pentagon Has No Plans to Shoot Down Free-falling Chinese Rocket // Tara Copp and Jacqueline Feldscher

Secretary Austin is monitoring the large rocket's decaying orbit, but spokesman says it's "too early" to develop options to intercept.

'A Lot of Risk' in Army's Proposed 2022 Budget, Service Leaders Say // Caitlin M. Kenney

As details remain under wraps, lawmakers fret about possible cuts.