Industry Week in Review – April 12, 2019

KippsDeSanto & Co. Industry Week in Review – April 12, 2019

Aerospace & Defense Update

FLIR Systems, Inc. acquired DroneBase, Inc., which offers a global enterprise pilot network of unmanned vehicles. DroneBase has a strong presence across numerous industries and operates in more than 70 countries, providing significant market access to FLIR Systems. This transaction follows-up FLIR’s acquisition of Endeavor Robotics announced earlier this year and marks the company’s fourth unmanned systems related deal in the last 3 years, positioning FLIR as a leading unmanned solutions provider.

This week, Lockheed Martin began final qualification testing on a ground control system to support the Air Force’s second Global Positioning Systems (“GPS”) 3 Satellite. This next-generation satellite, which is scheduled to be launched this summer, is expected to enhance navigation and timing information accuracy by 300% and improve signal jamming capabilities 8-fold. However, in order for this GPS to become operational, it requires a new ground control system that can link up to the satellite. Raytheon is developing this system, known as the Operational Control Segment, but it will not be active until 2021. Consequently, the Air Force contracted Lockheed Martin to upgrade the current system to bridge the gap until the Operational Control Segment becomes available. Lockheed Martin anticipates delivering the system in May, allowing the GPS 3 Satellite to be launched 18 months ahead of schedule.

Government Technology Solutions Update

Continuing the drawn-out procurement of the Pentagon’s $10 billion Joint Enterprise Defense Infrastructure (“JEDI”) contract, the Department of Defense (“DoD”) announced that “there is no adverse impact on the integrity of the acquisition process.” What had initially spurred from Oracle’s protest of the Pentagon’s single award strategy led to an extended delay as the DoD investigated whether Amazon had used undue influence to shape the award in its favor. With the DoD’s resolution, JEDI’s procurement will proceed with Amazon and Microsoft as the sole competitors, removing Oracle and IBM from the competition. JEDI has continued to dominate headlines over the last year, with the prevailing awardee tasked to become the lone cloud provider for warfighters domestically as well as around the globe. There are only a limited number of companies that have the capabilities, infrastructure, and required expertise to meet this mission’s requirements, especially with the onus of data security being a top priority. As the Pentagon continues with the award evaluation, DoD spokeswoman, Elissa Smith, revealed “the earliest the contract is likely to be awarded is mid-July.”

Big Mover(s)

Northrop Grumman (Up 2.4%) – Share prices were up this week following the U.S. Navy’s announcement that they selected Northrop Grumman to produce 24 E-2D Advanced Hawkeye aircraft. The contract is valued at $3.2 billion.

Transactions

EverWatch Corporation, a portfolio company of Enlightenment Capital, has acquired Northwood Global Solutions, LLC, a provider of cybersecurity, cloud, big data, and analytics solutions as well as IT services to the intelligence community and other Federal agencies. Terms of the deal were not disclosed.

FLIR Systems, Inc. has acquired DroneBase, Inc., a provider of global drone operations for unmanned aerial surveillance pilot networks. Terms of the deal were not disclosed.

 

Click here to review our comparable company analysis