Industry Week in Review – May 03, 2019

KippsDeSanto & Co. Industry Week in Review – May 03, 2019

Industry Week in Review – May 3, 2019

Aerospace & Defense Update

Alphabet Inc.’s Wing Aviation received the first U.S. authorization to operate a fleet of unmanned aircraft for consumer-goods deliveries, a move that could kick-start many companies’ commercial unmanned aircraft services.  Industry officials in the past operated under the assumption that it would take until 2021 for the Federal Aviation Authority (“FAA”) to implement wide-ranging unmanned aircraft rules establishing a framework for deliveries.  However, with its recent approval to Wing Aviation, the FAA is signaling its willingness to approve so-called air-carrier certifications.  This past week’s move highlights efforts by the U.S. unmanned aircraft industry to catch up to international counterparts as countries, such as Singapore and Australia, are moving faster than the FAA in authorizing routine commercial unmanned aircraft flights and setting up new air-traffic control systems to facilitate growth.

In a major step towards strengthening naval capabilities, South Korea plans to build three new destroyer-class ships equipped with American-made Aegis combat systems and sophisticated ballistic missile interceptors.  The country endorsed the $3.3 billion effort to acquire the additional destroyers by 2028, which plans to help the South Korean Navy respond to potential maritime disputes more effectively as well as carry out peacekeeping missions.  South Korea has also approved a plan to develop three new heavy-attack submarines by 2028.  Under this plan, three 3,450-ton submarines are to be constructed for $2.9 billion in which the systems development contract for the subs is to be awarded to Daewoo Shipbuilding and Marine Engineering.

Big Mover(s)

Maxar Technologies (Up 32.8%) – Share prices were up this week following news that the WorldView-4 satellite’s insurance payout of $183 million will be paid in full by insurers and will offset the $155 million loss in book value due to failed gyros that prevented the satellite from operating properly.

L3 Technologies (Up 6.8%) – Share prices were up this week following news that the it smashed analysts’ earnings per share and revenue expectations with first-quarter results.

Transactions

AE Industrial Partners has acquired Alpine Air Express, a provider of regional air cargo services primarily throughout the Mountain Region of the Western United States.  Terms of the transaction were not disclosed.

ComTech Telecommunications Corp. has acquired the state and local government Next Generation 911 business from General Dynamics Information Technology, Inc., a provider of standards-based, all-IP emergency communications infrastructure enabling voice and multimedia communications between a 9-1-1 caller and a 911 center.  Terms of the transaction were not disclosed.

II-VI Inc. has acquired Redstone Aerospace Corp., a provider of opto-mechanical subsystems, specializing in the design and fabrication of cryogenic systems, beam directors, and high-precision pointing gimballed mechanisms to both NASA and the Department of Defense.  The transaction is worth an estimated $30 million.

Parker Hannifin Corp. has agreed to acquire LORD Corp., a provider of advanced adhesives, coatings, and specialty materials as well as vibration and motion control technologies.  The transaction is worth an estimated $3.7 billion.

Tex Tech Industries, Inc., a portfolio company of Arlington Capital Partners, has acquired the Coating Business and U.S. Defense-Related Operations of Highland Industries, Inc., a provider of coated and laminated products for the aerospace & defense end markets.  Terms of the transaction were not disclosed.

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