Industry Week in Review – July 20, 2012

/in /by

The Aerospace Industries Association released a report this week estimating that more than 2 million American jobs could be lost next year if sequestration is allowed to proceed as planned.  Of the 2 million jobs, nearly 270,000 federal jobs are expected to be lost, but only 48,000 federal jobs are expected to be lost at defense agencies.  An additional 340,000 government contracting and private sector job losses could be tied to the impending budget cuts.  More information about the effects of sequestration will likely become available now that the House passed the Sequestration Transparency Act.  The bipartisan bill was approved by a wide margin and requires The White House to produce a report outlining how the $1.2 trillion in cuts will be distributed across the federal government.

Amid continued violence in Syria, U.S. Defense Secretary Leon Panetta stated at a press conference this week that the situation was, “rapidly spinning out of control.”  Panetta was joined by British defense chief Phillip Hammond.  Both agreed that the conflict in Syria must end with a peaceful transition and Assad stepping down from power.  Panetta noted that the United States and its allies were working to safeguard stockpiles of chemical weapons in Syria to prevent further conflict escalation.  In addition, both the United States and members of the U.N. Security Council are working together to craft a resolution that would impose sanctions on the Syrian regime.

Big Movers

Heroux-Devtek Inc. (Up 16.3%) – Shares traded upward this week after the Company announced it was selling its Aerostructure and Industrial Products Operations to Precision Castparts Corp.

Textron (Up 13.7%) – Shares traded upward this week after the Company reported second quarter profit of 58 cents a share, beating estimates of 44 cents a share.  Increased profits were driven by strong performance in Textron’s Bell helicopter and Cessna units.

Relevant Transactions

FutureNet Group, Inc acquired the assets of Smith & Wesson Security Solutions, a subsidiary of Smith & Wesson Holding Company.  Smith & Wesson is selling the assets of the subsidiary to concentrate more resources on its core firearms business.  Smith & Wesson will continue to operate the subsidiary as it explores strategic alternatives for a complete divestiture.  Wedbush Securities advised Smith & Wesson on the asset sale.  Terms of the deal were not disclosed.

Precision Castparts Corp. acquired Aerostructure and Industrial Products Operations from Heroux-Devtek Inc., an aerospace and industrial manufacturer in Canada.  Precision Castparts purchased the business units for CAD 300 million (~$296 million), approximately 2.3x revenue. The final purchase price is subject to post-closing adjustments.

L-3 Communications completed its spin off Engility Corporation, a provider of program management and systems acquisition support services for defense and civilian agencies.  One share of Engility will be distributed for every six shares of L-3 common stock.  Bank of America served as the financial advisor to L-3 Communications.

Environmental Systems Research Institute has acquired GeoIQ, a provider of software solutions for managing and analyzing data.  GeoIQ will be relocated from Arlington, VA to Washington, DC to join ESRI’s staff at a new software development center.

SAIC has agreed to acquire maxIT Healthcare, a provider of clinical IT implementation services to healthcare providers.  The total consideration is $493 million, with $473 million in cash up front and $20 million in an earn-out.  SAIC is expected to add approximately 1,300 maxIT employees to its Health Solutions Business Unit.

 Click here to review comparable company analysis.

Industry Week in Review – July 13, 2012

/in /by

Boeing reclaimed ground in its continuous battle against Airbus this week, at the Farnborough Airshow in England, after United Airlines announced its $14.7 billion order for 150 Boeing 757 planes. The American planemaker booked a total of 396 orders and commitments valued at approximately $37 billion, more than double its French competitor Airbus, which took in just 115 orders worth $16.9 billion.

Compared to last year’s conference in Paris, where Airbus and Boeing announced $72 billion and $50 billion in orders, respectively, this year’s show was more subdued. Airbus however, was still able to increase its position in the widebody jets landscape, gaining new customer Hong Kong’s Cathay Pacific

Big Movers

Booz Allen Hamilton Holding Corporation (Up 16.3%) – Shares traded upward this week after the Company announced in its regulatory filing that it is looking to refinance its current credit facilities, a move that could pay investors a special dividend worth a total of $1 billion.

OHB Technology AG (Up 11.9%) – Shares traded upward this week after the Company’s subsidiary, Compagnia Generale per lo Spazio, signed a contract to complete the Optical System for Imaging and Surveillance (“OPSIS”) satellite and ground system segment for the Italian Space Agency and Italian Department of Defense. The contract has a value of €13.5 million ($17 million).

Magellan Aerospace Corporation (Up 11.0%) – Shares traded upward this week after the Company announced its contract extension with Airbus to deliver aluminum and titanium materials, as well as structural wing components for Airbus’ A320, A330, and A380 aircraft. The extension, which lasts through December 2019, has a projected value of roughly £370 million ($576 million).

Relevant Transactions

Superior Aviation Beijing Co., Ltd to acquire Hawker Beechcraft Acquisition Company, LLC, a manufacturer of business jets, general aviation turboprops, and military trainers. The acquisition will allow Superior Aviation to increase its global presence with Hawker Beechcraft’s brand name and strong research and development programs. Hawker Beechcraft, who recently filed for Chapter 11 bankruptcy, will gain greater access to the Chinese business and general aviation marketplace. Hawker Beechcraft Defense Business will not be included in the $1.79 billion deal, but if sold, Superior Aviation will be reimbursed $400 million. The deal is pending bankruptcy court permission for the two companies to enter exclusive negotiations.

DC Capital Partners acquired Catapult Technology, a leading provider of IT and management consulting services to the federal government, including civilian, defense, intelligence, and law enforcement agencies. The acquisition by DC Capital will provide additional capital and professional resources to enhance Catapult’s market position, jump start growth, and further expand its customer base. Operating alongside two other DC Capital portfolio companies, Strategic Intelligence Group LLC and Kickstand, LLC, Catapult will be able to leverage the opportunity to cross-sell its IT and consulting services and solutions into new customers across the federal government. KippsDeSanto acted as exclusive financial advisor to Catapult Technology. Terms of the deal were not disclosed.

Click here to review comparable company analysis.

Industry Week in Review – July 6, 2012

/in /by

Following mishaps during a U.S. air raid last November, resulting in the death of 24 Pakistan soldiers, Pakistan has reopened its borders to NATO supply convoys serving Afghanistan. The seven-month blockade of essential supply routes increased already heightened tensions between both countries and forced the U.S. and its allies to rely on longer and more expensive routes through Asia, Russia, and the Caucasus.

The lift comes as a relief to both countries, as well as their respective NATO allies. Pakistan’s new prime minster, Raja Pervez Arshaf, acknowledged that continuation of the blockade would damage relations with the U.S. and other NATO states. Similarly, the U.S. and its NATO allies have indicated the supply routes are essential for the planned withdrawal of combat forces from Afghanistan through 2014. The move has received positive reception from political leaders, who say it is a commitment to improving relations and securing a brighter future for both Afghanistan and the region at large.

The blockade was costing the U.S. military roughly $100 million a month.

Big Movers

GKN plc (Up 13.2%) – Shares traded upward this week after the Company announced it would acquire Volvo Aero, the aero-engine manufacturing division of Volvo AB, for £633 million ($987 million).

Safran SA (Down 6.4%) – Shares traded downward this week after the Company agreed to form a 50/50 joint venture with MTU Aero Engines under the name AES Aerospace Embedded Solutions GmbH.

Relevant Transactions

Teledyne Technologies Inc. acquired BlueView Technologies Inc., a provider of compact forward-looking imaging sonar, microbathymetry systems, and 3D scanning sonar. The acquisition will add new technology and products to Teledyne’s marine group and increase instrumentation content on autonomous underwater vehicles and remotely operated underwater vehicles used in marine survey applications. The terms of the deal were not disclosed.

GKN plc to acquire Volvo’s Aerospace Division, the aircraft-engine unit of Volvo that produces components for aircraft, rocket, and gas turbine engines, for £633 million ($987 million). The acquisition will allow GKN to broaden its product range with engine components and expand its presence in the fast-growing civil aircraft sector.

Precision Castparts Corp. to acquire Klune Industries, a manufacturer of complex aluminum, nickel, titanium, and steel aerostructures. The acquisition will allow Precision Castparts to continue expansion into the widely fragmented aerostructures market with increased sheet metal and fabrication capabilities. The terms of the deal were not disclosed.

ITT Exelis acquired Space Computer Corporation, a producer of real time signal processing systems, software, and algorithms for the exploitation of hyperspectral sensor data. The acquisition will allow Exelis to address the challenge of data processing that has been an area of concern for the military, intelligence community, and existing customers. The terms of the deal were not disclosed.

Click here to review comparable company analysis. 

Industry Week in Review – June 29, 2012

/in /by

Airbus announced that it could enter the U.S. market as early as Monday with plans to build its A320 jets in Mobile, Alabama. Similar to when Toyota entered the domestic auto industry during the 1980s, this move could transform the domestic aerospace industry.

In response, Boeing has issued statements against its rival Airbus claiming that any job creation in the U.S. will not offset the alleged damage caused by “illegal subsidies” at Airbus. Both industry giants are familiar with illegal subsidies accusations, with a recent European Union case against Boeing currently moving through appeals at the World Trade Organization (“WTO”) and a previous case from the WTO that ruled Airbus had received illegal subsidies.

Media reports indicate that the package of incentives for Airbus, including right-to-work laws, lower labor costs than Europe, and the recent package outlined for the protracted U.S. Air Force refueling tanker contract could amount to more than $100 million and the creation of more than 1,000 jobs. Airbus already spends $12 billion each year in the U.S. sourcing parts for its jets, but the aggressive move into Boeing’s home court could potentially split the political support Boeing’s company has experienced.

Big Movers

Macdonald Dettwiler & Associates Ltd. (Up 34.0%) – Shares traded upward this week after the Company announced it will acquire Space Systems / Loral, Inc, the commercial satellite subsidiary of Loral Space & Communications, Inc. for $875 million.

Unisys Corporation (Up 24.8%) – Shares traded upward this week after the Company won a contract from the Department of Homeland Security to compete for task orders under the $3 billion Tactical Communications Equipment and Services contract vehicle.

Smith & Wesson Holding Corporation (Up 17.4%) – Shares traded upward this week after the Company announced fourth quarter sales of $129.8 million, compared to estimates of $126.5 million. Additionally, the Company’s profit grew to $12.5 million, from $1.1 million in the same quarter last year.

Relevant Transactions

General Dynamics to acquire Earl Industries’ Ship Repair and Coatings Division, a ship repair company that supports the U.S. Navy fleet in Norfolk, VA and Mayport, FL. The acquisition allows General Dynamics to expand its National Steel and Shipbuilding Company (“NASSCO”) maintenance and repair operations to two key East Coast naval ports. The terms of the deal were not disclosed.

Cassidian / EADS to acquire Carl Zeiss’ Optronics, a defense optics unit of Carl Zeiss that develops, manufactures, and distributes a wide range of optical and optronic products and systems for the Army, Navy, and Air Force. The acquisition allows Cassidian, the defense unit of EADS, to expand its offerings with Optronics’ night vision binoculars, military laser pointers, and satellite optics. The terms of the deal were not disclosed.

Macdonald Dettwiler & Associates (“MDA”) to acquire Space Systems / Loral, a subsidiary of Loral Space & Communications Inc. responsible for the design, manufacturing, and integration of commercial and government satellite systems worldwide, for $875 million. The acquisition allows MDA to support the growing demand for high-powered satellites in the commercial market.

Deloitte to acquire IE Discovery, a provider of litigation support and electronic discovery management services to government agencies, corporate law departments, and outside counsels. The acquisition allows Deloitte to provide electronic data discovery services to the federal government and compete with other service providers’ existing federal e-discovery services. The terms of the deal were not disclosed.

BE Aerospace to acquire Interturbine, a leading provider of material management logistical services to global airlines and MRO providers. The acquisition will double BE Aerospace’s consumables product portfolio and will help to position the Company to offer a comprehensive range of products and services on a single-source basis to its customers. Interturbine will be acquired for a cash consideration of approximately €200 million ($249 million).

Click here to review comparable company analysis.

Industry Week in Review – June 22, 2012

/in /by

The U.S. Army is looking to preposition equipment around the world to keep it in close proximity to potential flashpoints and to assist with training missions with partner nations. Army officials have said the current plan will call for approximately 11,000 Mine Resistant Ambush Protected Vehicles to be scattered globally in strategic locations, arguably places terrorist elements believe have the least resistance.  According to the U.S. Army Chief of Staff General Ray Odierno, both Australia and Africa are critical places for such a program.

As the Pacific region attracts the attention of both the White House and the Pentagon, the Army plans to bring countries from around the region to Australia to conduct multilateral training efforts. Gen. Odierno already has 66,000 soldiers stationed in the Pacific area and is implementing this new program to ensure they remain dedicated to this region, since these troops are no longer rotating in and out of Iraq and Afghanistan.

Africa, on the other hand, will be home to various advisory missions and training operations, such as the AFRICOM command, a pilot program for the Regionally Aligned Force concept.  This concept aims to deepen forces knowledge and understanding of the culture and politics in varying regions.

Finally, back in the U.S., Gen. Odierno hopes to strengthen ties with Special Operations Forces (“SOF”), particularly on foreign advisory and weapons of mass destruction missions that were developed in Iraq, in a continued effort to decrease complaints suggesting a lack of integration between SOF and general purpose forces.

Big Movers

Federal Signal Corp. (Up 21.9%) – Shares traded upward this week after the Company agreed to sell its Federal Signal Technologies LLC business to 3M Co. for $110 million in cash, in a step to reduce its debt.

American Science & Engineering Inc. (Up 5.1%) – Shares traded upward this week after an announcement that the Company received a new $6.7 million service and maintenance order from an undisclosed customer to support its fleet of American Science & Engineering detection systems.

Thales SA (Up 5.0%) – Shares traded upward this week after an announcement that the Company had been awarded a £29 million ($45 million) four-year contract from the UK Ministry of Defense to support their Intelligence Surveillance Target Acquisition & Reconnaissance Mission Support System.

Relevant Transactions

CACI International Inc. to acquire Delta Solutions and Technologies Inc., a management consultant and IT specialist focused on federal financial management systems design, development, integration, and operations and maintenance.  The acquisition will allow CACI to remain up-to-date on the financial management systems technology critical to the business operations of every federal agency. Terms of the deal were not disclosed, but an expected July 1st close date was announced.

Click here to review comparable company analysis.

Industry Week in Review – June 15, 2012

/in /by

The U.S. Defense Department could face up to $100 billion in budget cuts under any deficit reduction deal, according to the chairman of the U.S. Senate Armed Services Committee, Senator Carl Levin.  These cuts would be in addition to the $487 billion the Pentagon already plans to reduce its projected spending by over the next 10 years. According to Sen. Levin, areas such as, the nuclear weapon stockpile, could safely handle a decrease in funding, but reductions upwards of $10 billion, over a 10-year period, across the entire DoD, is risky.  Ultimately, defense will have to play some role in a larger deficit reduction package to avoid sequestration of the Pentagon’s budget.

As an effect of these cuts, trans-Atlantic relations are at serious risk should the U.S. plan to kill off development of the Medium Extended Air Defense System (“MEADS”).  The air-transportable MEADS was developed by the U.S., in conjunction with Germany and Italy, to replace the Patriot anti-missile system.  The U.S. previously agreed to fund the program through its “Proof of Concept” phase in 2014, after deciding not to purchase the theater-based missile defense systems. However, with current budget restructuring and reductions, the U.S. National Defense Authorization Act for 2012 requires the funds to be severed, an action that could negatively affect the U.S. relationship with Germany, Italy, and the NATO alliance in the future.

Big Movers

Bombardier Inc. (Up 5.5%) – Shares traded upward this week after an announcement that Series 2 Preferred shareholders, who receive a monthly floating adjustable cash dividend, have the right to convert all, or part, of their shares for a one-for-one basis into Series 3 Preferred Shares, to receive a quarterly fixed cash dividend for the following five years.

AAR Corp. (Down 13.3%) – Shares traded downward this week after an announcement that the Company’s Board of Directors authorized repurchase of up to $50 million of its outstanding shares of common stock.

Relevant Transactions

Mercury Computer Systems to acquire Micronetics, a manufacturer of microwave and radio frequency (“RF”) components and subsystems used in a variety of defense, aerospace, and commercial applications. Mercury pursued the acquisition to “enhance [its] integrated digital and RF subsystem solutions for existing and next generation defense and intelligence programs.”  Mercury’s offer is $14.80 per share, implying an enterprise value for Micronetics of around $75 million.  For its fiscal year ended March 31, 2012, Micronetics reported revenues of $46 million.

Teledyne RD Instruments to acquire BlueView Technologies, a provider of compact, high-resolution, acoustic imaging and measurement solutions.  The acquisition will add unique technology and products to the Teledyne Marine group, whose 11 businesses provide acoustic sensors and communication devices, harsh environment interconnects, and complete autonomous underwater vehicles. Terms of the deal were not disclosed.

Saab acquires Taby Displayteknik AB, a developer of simulator solutions such as, Joint Fires Synthetic Training. The acquisition will establish Saab as a training provider for virtual joint exercises, and is part of its growth strategy to offer a more complete virtual training business. It also complements Saab’s previous acquisition of E-COM, a provider of subsystems for virtual training in virtual joint exercises.  Taby Displayteknik was a subsidiary of ISD Technologies AB, which Saab previously owned 30 percent. Terms of the deal were not disclosed

Click here to review comparable company analysis. 

Industry Week in Review – June 8, 2012

/in /by

The DoD has announced that it is working to increase and broaden U.S. military relationships with India, Vietnam, and other Asia-Pacific countries, “transitioning [U.S.] defense trade beyond the ‘buyer-seller’ relationship to substantial co-production and, eventually high-technology joint research and development.”  According to U.S. Defense Secretary Leon Panetta, up until now, export restrictions and controls regarding such practices have made these types of relationships near impossible.

However, since the release of the new U.S. military strategy in January, the Pentagon has been in the process of creating a new approach that will speed up foreign government requests and favor building defense capabilities of other nations.  Notably, India is working to create joint development projects with the U.S. in the fields of weapons and equipment, with the ultimate goal of technology being transferred to India in an effort to help develop its domestic defense industry.  Over the past decade, the U.S. has sold more than $8 billion in defense articles to India.

Big Movers

Orbital Sciences Corp. (Up 11.1%) – Shares traded upward this week after an announcement that the Company’s PegasusR Rocket will launch NASA’s Nuclear Spectroscopic Telescope Array satellite on June 13, 2012. Orbital is providing the spacecraft platform, performing overall system integration, and conducting the launch operations.

Relevant Transactions

Force 3 acquired secureRAD, a provider of disruptive technology solutions for the medical imaging industry.  Force 3 is currently a provider of imaging solutions to the military dental market, but pursued the acquisition to expand into medical image storage, management, and display markets. This new technology will allow Force 3 to address the continuous growth within the healthcare IT market, offering additional products to its growing customer base.  Terms of the deal were undisclosed.

Drew Marine to acquire Chemring Marine, a leading supplier of marine distress signals including hand flares, man overboard buoys, line-throwers, and other required rescue products. Chemring Marine represents the maritime interests of Chemring Group PLC and will be acquired for a cash consideration of £32 million ($49 million). The acquisition will provide Drew Marine with essential products for safety, reliability, and compliance to the maritime industry. Drew Marine was acquired by J.F. Lehman & Company in 2009.

Northrop Grumman to acquire M5 Network Security, an Australian provider of cybersecurity and secure mobile communications products and services, as well as advanced analytics, to Australian military and intelligence organizations. The acquisition will enhance Northrop Grumman’s ability to provide innovative, proven cybersecurity and communication solutions to Australian customers. Terms of the deal were undisclosed.

Click here to review comparable company analysis.


Industry Week in Review – June 1, 2012

/in /by

The DoD’s growing inventory management problem emerged in headlines this week after a former DLA director, Keith Lippert, warned of an impending “inventory crisis” as agencies are faced with the cost of eliminating excess goods currently in store and dealing with the flood of items that are returning from conflict zones overseas. According to DoD estimates, the current excess could be valued at $9 billion within an overall inventory valued at ~$100 billion. The excess in inventory spans all artifact categories, including vehicles, gear, and weapons, all compiled after nearly a decade of war abroad.

While the DLA has several options in dealing with this excess (e.g., discounted sales, foreign military sales, destruction), the manpower and cost needed to administer this issue provides for a significant cost center in the context of broader fiscal pressures and numerous higher priorities. As reported by the GAO, the current inventory problem has been driven by decades of poor management practices and procedures, weaknesses in accurately forecasting demand, and challenges in establishing the proper metrics and analysis techniques to gain visibility into the supply chain. While recent efforts have focused on increased data analysis to uncover efficiencies and strengthen fiscal policy with respect to inventory management, the issue of reducing existing stockpiles and cleaning up past missteps may soon become a much more serious matter across the DoD community.

Big Movers

Booz Allen Hamilton (Up 9.7%) – Shares traded upward this week after an announcement that its Board of Directors authorized and declared a special dividend of $1.50 / share, which analysts regarded as a positive surprise payout for shareholders.

Aeroflex Holding Corp. (Down 6.7%) – Shares traded downward this week after an investigation over potential violations of securities laws was announced; the potential violation concerns whether or not Aeroflex made materially false or misleading statements about the business to its stakeholders.

Relevant Transactions

Teledyne Technologies to acquire LeCroy Corporation, a leading supplier of oscilloscopes, protocol analyzers, and signal integrity test solutions with approximately 500 employees worldwide. The acquisition will serve to broaden Teledyne’s portfolio of analytical instrumentation businesses and provide a commercial outlet for Teledyne’s Indium Phosphide process technology and ultra-high frequency mixed signal design capabilities. Teledyne’s offer is $14.30 / share, implying an enterprise value for LeCroy north of $290 million. As of March 31, 2012, LeCroy’s trailing twelve months revenue was $196 million.

TZP Group to acquire Total Military Management LLC, a provider of non-asset based logistics services to transportation service provider partners serving the military market worldwide. Total Military Management (“TMM”) was previously backed by Philadelphia-based financial sponsor Eureka Growth Partners. Edgeview Partners served as the exclusive financial advisor of Eureka and TMM. Terms of the deal were undisclosed.

CGI Group to acquire Logica PLC, a provider of business consulting, system integration, cloud computing, and outsourcing services to various industries across Europe. CGI pursued the acquisition to “create a global technology champion with significant presence throughout the Americas, Europe, and Asia” with 72,000 employees in 43 countries and annual revenues greater than $10 billion (more than double CGI’s current size). CGI’s offer represents a ~60% premium over Logica’s previous day closing price, and implies an enterprise value above $3.2 billion. Logica was advised by Rothschild, Bank of America Merrill Lynch, and Deutsche Bank, while CGI was advised by Goldman Sachs.

 Click here to review comparable company analysis.

 

 

Industry Week in Review – May 25, 2012

/in /by

Just six years after NASA established the Commercial Orbital Transportation Services Initiative, this Friday, Space Exploration Technologies Corp., or SpaceX, became the first commercial space provider to successfully reach and dock its unmanned re-supply craft, Dragon, with the International Space Station.  The linkup marks a significant step in NASA’s move towards transferring orbital cargo and crew transport responsibilities from the space shuttle to the private sector.  NASA hopes companies, like SpaceX, will allow the space agency to focus its efforts, instead, on a decades-long goal of sending humans on deep space exploration missions, first to an asteroid, and then Mars.

After finding Type 2 cracks in many of its A380’s wing rib feet earlier this year, Airbus has announced that it will have to retrofit 120 aircraft to resolve the problem while a permanent fix is implemented into new build aircraft.  The aircraft manufacturer has only delivered 74 A380s to date, however the total number of retrofits will include work already in the production system, raising the total aircraft count to 120. With two fixes developed by Airbus to permanently deal with the cracking of rib feet – one addressing the retrofits and the other altering the production process – the total cost of resolving the situation is expected to top €260 million ($327 million).

Airbus is currently in discussions with airlines over how best to implement the retrofits. Airlines will have to choose whether to park aircraft for several weeks, in order to fully install the fix, or to implement changes over time during several C-checks. Others are choosing instead, to not take delivery of aircraft until the permanent solution is installed. Airbus’ permanent fix should be available in early 2013

Big Movers

HEICO Corp. (Up 13.1%) – Shares rose this week after the Company increased its year-over-year FY2012 estimates in net sales to 17% to 20% and growth in net income to 12% to 14%, up from 15% to 17% and 10% to 12%, respectively.

Smith & Wesson Holding Corporation (Up 10.6%) – Shares rose this week after the company reported April Quarter sales around $129 million, compared to estimates of $120 million. Additionally, the Company’s backlog increased to about $439 million, up about 135% compared to a year ago.

Relevant Transactions

Robbins-Gioia, LLC (“RG”) has been acquired by a management led team of investors for an undisclosed amount.  The acquisition will once again establish RG as an independent, U.S.-owned entity and will allow management to refocus on expanding its services and technology business.  The Company was acquired by the Institute for International Research in 2005, which was in turn acquired by Informa, the world’s largest conference and event company. Robbins-Gioia provides management consulting services to non-profit organizations, large government agencies, and major commercial companies worldwide.

Exceed Corporation acquired Valor Concepts, a designer and integrator of complex security and communication systems for the Federal Government.  The acquisition will provide Valor with the necessary capabilities in system design, consulting, system integration, and related services that are essential in the security and IT industries. Terms of the deal were not disclosed.

Moelis Capital Partners acquired Mxi Technologies, a provider of aviation maintenance management software solutions to commercial airlines, OEMs, MRO organizations, and defense operators.  The acquisition will help Mxi continue to grow and meet the needs of customers and prospects alike.  Terms of the deal were not disclosed.

Precision Castparts Corp. to acquire Dickson Testing Company, Inc. and Aerocraft Heat Treating Company, Inc., for an undisclosed amount.  Dickson tests aircraft parts by measuring metrics such as fracture toughness, shear, creep, stress fracture, corrosion, salt spray and alloy depletion, while Aerocraft, heat treats steel, titanium and high-temperature materials for aircraft-engine and structural parts. The two businesses enable Precision Castparts to integrate and expand their capabilities both within its facilities and with its many valued aerospace customers worldwide.

Click here to review comparable company analysis.

Industry Week in Review – May 18, 2012

/in /by

This week, the House on Friday passed a $642 billion defense bill that abandons the deficit-cutting agreement that President Obama and congressional Republicans backed last summer. After a 299-120 vote, lawmakers backed the spending blueprint that adds $8 billion for the military for next year. The bill calls for a missile defense site on the East Coast that the military opposes and restricts the ability of the President to reduce the arsenal of nuclear weapons under a 2010 treaty with Russia. It also preserves ships and aircraft that the Pentagon wanted to retire in a cost-cutting move. In addition, lawmakers rejected the military’s request for another round of domestic base closings.

The spending blueprint calls for money for aircraft, ships, weapons, $88.5 billion for the war in Afghanistan and a 1.7% pay raise for military personnel, billions of dollars more than Obama proposed. The bill snubs the Pentagon’s budget that was based on a new military strategy shifting focus from the Iraq and Afghanistan wars to future challenges in Asia, the Mideast and in cyberspace. The bill spares aircraft and ships slated for retirement, slows the reduction in the size of the Army and Marine Corps and calls for construction of a new missile defense site on the East Coast. The bill also includes new funding (opposed by Defense Secretary Leon Panetta) for certain tank upgrades, additional submarines, long-range bomber development and Air Force drones.

Under the terms of a deficit reduction deal reached last year by administration and congressional leaders, defense spending is set to be cut by roughly $450 billion over the next decade. The Pentagon could also be on the hook for about half of $1.2 trillion in additional savings over the next 10 years if Congress fails to come up with an alternative deficit reduction plan. The effort to stick to last year’s deficit-cutting pact and cut $8 billion from the bill failed on Friday after a 252-170 vote.

Big Movers

American Science and Engineering, Inc. (Down 27.7%) – Shares traded down this week after AS&E released results for the fourth quarter and fiscal year ended March 31, 2012. The Company reported revenues of $203.5 million as compared with record revenues of $278.6 million for the prior fiscal year; net income was $21.4 million as compared with record net income of $42.8 million for fiscal year 2011, representing a year-over-year decline of 50%.

Lakeland Industries, Inc. (Down 25.1%) – Shares traded down this week after the company announced that it received notice of an unfavorable arbitration award in the arbitration proceeding in Brazil involving the Company and two former officers of Lakeland Brasil. In the arbitration proceeding, the former officers sought a determination that they were terminated by the Company without cause and, therefore, entitled to be paid their portion of the Maximum SPP and the monthly remuneration that they would have been paid from the date of termination through the end of their contractual employment period on December 31, 2011. On May 8, 2012, the Company received the arbitration decision which accepted the former officers’ requests.

Relevant Transactions

CAE announced that it has acquired Oxford Aviation Academy (“OAA”), a provider of aviation training and crew sourcing services for C$314 million. This acquisition is meant to strengthen CAE’s leadership and global reach in civil aviation training by increasing its training center footprint, growing its Ab-Initio flight training network, and extending its portfolio by adding OAA’s Parc Aviation, a global leader in pilot and maintenance crew sourcing for airlines and leasing companies. The Company had revenues of approximately C$280 million during CAE’s fiscal year 2012 and the purchase price represents approximately 9 times OAA’s EBITDA during the same period. The acquisition is expected to be accretive to CAE’s earnings in fiscal year 2014.

The Jordan Company, L.P. has agreed to acquire VT Services, Inc., the Babcock International Group U.S. defense business for $98.8 million. VT, Services Inc. is an engineering support and facilities management business. The business was acquired as part of Babcock’s acquisition of VT Group plc, which was completed in July 2010. The division’s last reported revenue was approximately $324.1 million. The disposal is expected to complete by the end of June 2012.

Click here to review comparable company analysis.