Industry Week in Review – June 10, 2016
Aerospace & Defense Update
In line with its government’s recommendation in early May, Denmark has agreed to purchase 27 of Lockheed Martin’s F-35A Joint Strike Fighters for approximately $3 billion. The new Joint Strike Fighters will replace Denmark’s current fleet of aging F-16s and concludes Denmark’s flight modernization program, which was relaunched in 2013. The F35-A beat out competition from the Eurofighter Typhoon and the Boeing F/A-18 Super Hornet, as Denmark is an industrial partner on the F-35 program. Denmark’s decision to settle on the F-35 has long been expected by analysts, as the industrial opportunities of the program can provide long term economic benefits for Danish companies.
Airbus Group announced it raised roughly $2.7 billion after selling its remaining stake in Dassault Aviation. Airbus held a 46% stake in the company as recently as November 2014 after inheriting ownership from the French state via one of its predecessor companies more than a decade ago. However, since then Airbus has slowly been selling down its shares, holding roughly 24% of the firm before this most recent sale. The decision comes as Airbus seeks to focus on its core business, as the European aircraft maker has already sold its satellite communication business and defense electronics business this year.
Government Technology Solutions Update
The SOCOM Wide Mission Support (“SWMS”) contract vehicle, which was originally awarded to Booz Allen Hamilton, CACI-WGI Inc., Raytheon Blackbird Technologies, and MacAulay-Brown in July of 2015, is again making headlines. As a result of bid protests, the $900 million contract vehicle has been awarded to six additional companies: ACADEMI Training Center LLC, AECOM, ARMA Global Corp., Fulcrum IT Services, Jacobs Technology, and Raytheon Technical Services. Under the contract, the companies will provide services in the areas of program management, engineering and technical services, and professional services to the U.S. Special Operations Command. The contract has a current period of performance that extends through July of 2020.
Despite recent protests, the Department of Homeland Security (“DHS”) has decided that its $1 billion cybersecurity contract vehicle, DOMino, will be given to Raytheon after all. Northrup Grumman began protesting the DHS’ choice to award the contract to Raytheon eight months ago to the Government Accountability Office (“GAO”). Originally awarded in September of 2015, the contract tasks Raytheon with improving and maintaining the intrusion protection and detection system known as EINSTEIN, as well as other cyber tools under the National Cybersecurity Protection System. The DOMino program is an essential piece to the broader effort on behalf of the DHS to expand cyber protections throughout the government as well as improve information sharing.
Big Movers
Comtech Telecommunications (Down 13.8%) – Shares were down this week as the Company reported a fiscal third-quarter loss of $14.4 million, after reporting a profit over the same period a year before.
Sturm, Ruger & Co. (Down 10.7%) – Shares declined after a report was released that gun background checks dropped nearly 13% in May compared to the prior month.
Transactions
Astro Park Corporation acquired Chemko Technical Services, a provider of precision cleaning, testing, and fabrication services to both NASA and the private sector in all applications of the aerospace industry. Terms of the deal were not disclosed.
Heptagon Micro Optics acquired RF Digital Co., a designer and manufacturer of RF modules such as wireless RF transmitter, receiver, and transaction modules. Terms of the deal were not disclosed.
