News & Events

Industry Week in Review – May 16, 2014

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International competition between the aerospace giants, Airbus and Boeing, continues to heat up as both companies secured multi-billion dollar orders in China this week.  China Southern Airlines Company announced an order of 50 Airbus A320neo aircraft, as well as 30 A320 jets, with a combined order value of approximately $7.3 billion.  On Boeing’s side, China’s Juneyao Airlines Company ordered 50 single-aisle 737 model aircraft in a deal worth approximately $3.8 billion.  Both orders come at an opportune time when a growing middle class in China continues to fuel a travel boom, with Airbus predicting the Chinese aviation market will overtake the U.S. as the largest market by 2032.  The trend is further supported by China’s Civil Aviation Administration stating earlier this year it would loosen regulations and study tax breaks to encourage low-cost travel and budget carriers.  Airbus plans to begin delivery of its aircraft in 2016, while Boeing expects the aircraft in its order to be in operation by 2020.

The Department of Homeland Security (“DHS”) awarded a new round of contracts under the Functional Category 1 (“FC1”) component of DHS’ Enterprise Acquisition Gateway for Leading Edge Solutions II (“EAGLE II”) vehicle.  With the new round of awards, 68 companies, including Accenture, Boeing, Booz Allen Hamilton, and General Dynamics, will now compete under the unrestricted FC1 component of the contract.  DHS had previously selected 15 companies to compete under the unrestricted portion of FC1 in September 2013, along with 15 small businesses to compete under the small business portion.  With a seven-year period of performance and $22 billion ceiling value, EAGLE II has remained a highly coveted vehicle among government technology contractors; however, this new round of expanded awardees may also dilute the attractiveness of awardees from an M&A perspective.

Big Movers

Engility Holdings Inc. (Down 12.7%) – Shares were down this week after the Company announced relatively flat fiscal quarter earnings, with quarterly revenue down 6.3% year-over-year, but still beating analyst estimates on an earnings per share basis.

Relevant Transactions

Chemring Group plc acquired 3d-Radar AS, a developer of commercial three-dimensional ground penetrating radar technology for airport runway inspection and railway maintenance.  Chemring paid $3 million for the acquisition.

Dovel Technologies, Inc. acquired RNSolutions, Inc., a provider of enterprise architecture, application development, and grant management solutions to Federal agencies, with a strong presence serving the Department of Health and Human Services.  Terms of the deal were not disclosed.(1)

(1) KippsDesanto & Co. served as the exclusive financial advisor to RNSolutions, Inc.

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