A&D Energy and Power Challenges Offer Bright Opportunities
Across military / commercial aerospace and defense, energy and power challenges faced by both industry players and end users are creating considerable opportunities. Boeing’s new 787 Dreamliner was grounded by the FAA in January due to battery-related incidents, and the company is actively pursuing solutions to resolve the flare-up and get its flagship aircraft back into service. In addition to the highly publicized problems Boeing is facing, military end users continue seeking increasingly powerful and efficient solutions, including low-footprint expeditionary energy and lighter battery systems.
As industry looks to address issues such as these, M&A has helped serve as a conductor to quickly bring forward the latest technologies. Large aerospace and defense firms have strong balance sheets and will continue to use M&A as a proxy for organic initiatives / internal R&D and means to generate returns. Safran’s $400 million purchase of Goodrich Electric Power Systems is expected to save the French firm a decade of R&D and estimated in-house costs equal to the acquisition purchase price, with solutions that provide higher performance and lower cost. In addition, large firms have acquired several military-oriented fuel cell businesses, including ABSL and Adaptive Materials, which serve the underlying demand for lightweight products to power expeditionary soldier and unmanned aerial systems with minimal signature.
Even in an uncertain and sometimes choppy market, leading energy and power technologies are often a relatively insulated and evolving area that will continue to see acquisition interest.