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.
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