News & Events

Industry Week in Review – September 11, 2015


Aerospace & Defense Update

According to industry reports, Aerojet Rocketdyne is in discussions with Boeing and Lockheed Martin about acquiring their joint venture, United Launch Alliance (“ULA”), for approximately $2 billion.  If a deal is finalized, the agreement will be subject to regulatory approvals.  Recently, ULA has faced financial and political pressure as competition from lower-cost services, particularly SpaceX, increases, and reliance on Russian-built engines continues.  Aerojet Rocketdyne currently serves as a major supplier of engines for many ULA rockets, and has been looking to provide hardware for its next-generation boosters.  The deal would provide ULA with a more unified leadership, and perhaps an improved way to fund the company’s plans to develop a new fleet of all-domestic rockets.

This past week Boeing announced plans to increase its monthly production of the 767 widebody to 2.5 units per month by late 2017, to accommodate a 50-plane order from FedEx.  Currently, the company builds around 1.5 jets monthly, but had previously detailed plans to raise production to two early next year.  In addition to the FedEx order, a heavily modified version of the 767 is gearing up for production as the Air Force’s next refueling tanker. A spokesperson for the company states that increasing production “provides the flexibility needed to address additional commercial orders, while meeting all of our customer requirements.”

Government Technology Solutions Update

With the end of the government fiscal year approaching, Congress is set to vote on 12 spending bills in order to avoid automatic budget cuts.  Given the economic effects associated with sequestration and a government shutdown, many in Washington are anticipating a Continuing Resolution (“CR”) over the coming weeks which would maintain current funding levels in the interim.  While this mitigates the negative effects associated with sharp budget cuts or a shutdown, government contractors do lose contract and revenue visibility until Congress approves a final funding plan.  While uncertainty still remains, many are optimistic that Congress will be motivated to reach a compromise by year-end.

The General Services Administration (“GSA”) has issued a Request for Information (“RFI”) in an effort to more efficiently facilitate working relationships between suppliers and the Federal government.  The request proposes changes to the GSA’s IT Schedule 70, the largest and most widely used acquisition vehicle in the Federal government, focusing on aggregating input from industry leaders to understand how contractors can more successfully access the Federal market.  The goal is to streamline processes so that more small businesses and even companies unfamiliar with government practices can access opportunities provided by the Federal, State & Local governments, with the hope that government customers will benefit from increased access to innovative companies, enhanced technology solutions, and a wider range of contracting options.

Big Movers

Esterline (Up 7.8%) – Shares were up this week following a $21 million contract award by General Dynamics UK for displays and video processing units on the armored SCOUT Vehicle Program

Curtiss-Wright Corp. (Up 6.1%) – Shares were up this week in response to the introduction of a rugged mission display for avionics applications

Transactions

Inland Technologies acquired Boreas Holdings, a provider of outsourced airport services in North America and Europe.  Terms of the deal were not disclosed.

Versar to acquire Johnson Control’s Federal Security Systems Integration Business, a provider of design, installation, and support solutions for physical security, network security, and facilities management systems for the Federal government.  The deal is worth an estimated $20 million, including $9.5 million of contingent payments.

SageNet acquired Turberry Solutions’ Cybersecurity Division, a provider of consulting and professional services delivering large-scale technology projects.  Terms of the deal were not disclosed.

Click here to review comparable company analysis.