Industry Week in Review – June 17, 2011
The House Appropriations Committee, which met on Tuesday, cut $8.9 Billion from the Pentagon’s 2012 Budget request, providing $530 Billion for the Pentagon’s base budget. In order to reach this reduced base allocation, the defense subcommittee found areas where reductions are possible without adversely impacting the readiness of the military, such as the Army’s Enhanced Medium Altitude Reconnaissance and Surveillance program, one of the hardest hit in this round of cuts. In a separate hearing of the Senate Appropriate Committee, Defense Secretary Robert Gates noted that significant decisions would have to be made to achieve President Obama’s proposed cuts, a less optimistic view that that of Leon Panetta’s earlier comments that cuts would not lead to a weaker military.
Notes on some big movers:
EMS Technologies Inc. (Up 32.4%): Shares rose for the week after the Company announced that it agreed to be acquired by Honeywell (see additional details below)
Globecomm Systems Inc. (Up 9.0%): Shares rose for the week as the Company reported EPS of $0.17 on sales of $62.5 million, beating analysts’ EPS projections of $0.15; the Company was also awarded GSA FCSA Schedule-70 IDIQ with an approximate value of $3 billion
Notes on some relevant transactions:
Vaupell Holdings, Inc., a portfolio company of H.I.G. Capital, announced Wednesday that it has acquired Russell Plastics Technology Company, Inc., a supplier of composite plastics products and assemblies serving primarily the aerospace and military markets for an undisclosed amount. The acquisition expands the scope of Vaupell’s products and services, with the addition of composite manufacturing capabilities, and expands access to the rotocraft and military markets.
General Dynamics announced Tuesday that it will acquire Fortress Technologies, Inc., a provider of secure wireless networking equipment for the U.S. military and other government customers. The terms of the cash transaction, which is expected to close in 3Q11, were not disclosed. The acquisition will enhance GD’s ability to meet the growing tactical-communications requirements of global defense and civilian agencies.
Honeywell announced Monday that it will acquire EMS Technologies, Inc., a leading provider of connectivity solutions for mobile networking, rugged mobile computers, and satellite communications, for $33 a share, or an enterprise value of $491 million. The Company generated LTM Revenue and EBITDA of $357.4 (1.37x) and $41.6 million (11.8x), respectively. The acquisition strengthens Honeywell’s core mobile computing business and expands its addressable market with complementary new products, channel partners, and entry into the warehousing and port segments that it believes will be growth drivers for the business.