Industry Week in Review – June 26, 2015
Aerospace & Defense Update
On Tuesday, Boeing announced that Dennis Muilenburg will replace Jim McNerney as Chief Executive Officer, effective in July of this year. Muilenburg joined Boeing in 1985 as an intern and throughout his tenure has held top positions in both the Defense Space & Security division and Combat Systems division. McNerney held the top position for the past decade and will continue to serve alongside Muilenburg and maintain his position as Chairman of the Board of Directors. Boeing stock fell slightly after the announcement, however; Muilenburg is unlikely to make significant strategy changes which should comfort investors.
Government Technology Solutions Update
The General Services Administration (“GSA”) is currently reviewing more than 75 responses to a request for information (“RFI”) concerning a cloud-based contract vehicle. The purpose of the RFI is to collect information from both the public and private sector in order to explore different models and avenues for Federal agencies to acquire cloud-based technology. Though the evaluation is underway, the agency has not yet committed to the contract vehicle. The GSA currently has two cloud blanket purchase agreements (“BPAs”) on IT Schedule 70; however, they are relatively small in scope compared to the technologies that Federal agencies currently seek to acquire. If created, the final contract is estimated to have a ceiling value of approximately $50 billion.
In the midst of congressional hearing to address recent cyber breaches, the Office of Personnel Management (“OPM”) released a cybersecurity plan to tighten its defenses. The 15-step modernization plan involves a review of the OPM’s use of encryption in databases that is expected to be completed by July 15th and a pledge to complete the implementation of security features such as two factor Strong Authentication, which uses both passwords and personal identity verification cards. Other significant changes include hiring a new cybersecurity advisor to work alongside the OPM Chief Information Officer (“CIO”). In addition to these measures, OPM Director, Katherine Archuleta, will also hold a summit with industry experts to leverage lessons learned from the private sector. The plan, expected to be completed within the next six months, has been met with support from Tony Scott, Federal CIO, but also opposition from OPM Inspector General (“IG”) Patrick McFarland.
Big Movers
Embraer (Down 3.0%) – Shares were down this week in response to an investigation regarding possible securities laws violations by Embraer in connection to certain financial statements.
MTU Aero Engines (Up 3.4%) – Shares were up this week following particularly strong performance at the Paris Air Show. The Company booked $905 million in orders at the show of which a significant portion was for its PW1000G engine.
Transactions
Bridgepoint Capital Ltd.’s Shimtech Industries Ltd. acquired Angeles Composites Technologies, Inc., a supplier of advanced structural composite assemblies and components serving the global commercial and military aerospace markets.
Aspen Avionics, Inc. acquired Accord Technology LLC, a provider of GPS sensors and receivers to the aerospace industry. Terms of the deal were not disclosed.
Premier Aviation Overhaul Centre, Inc. has executed an offer to acquire substantially all of the assets of Discovery Air Inc.’s subsidiary, Discovery Air Technical Services, a provider of maintenance, repair, and overhaul (“MRO”), modification, engineering, and certification services, focused on the regional aircraft marketplace. Terms of the deal were not disclosed.
Airbus Group Australia Pacific acquired Safe Air Ltd. of New Zealand, a provider of military aerospace MRO services for the Royal New Zealand Air Force. Terms of the deal were not disclosed.
UrtheCast International Corp. entered into a definitive agreement to acquire Elecnor’s Earth Observation business, dba Deimos Imaging, an owner and operator of two satellites and the collection, analysis, distribution, and licensing of the EO imagery captured by satellites. The deal is worth an estimated $82.8 million.
