Industry Week in Review – December 28, 2012
Last weekend President Obama nominated Senator John Kerry (D-Mass.) for the position of Secretary of State in the Administration’s second term. Mr. Kerry has served as chairman of the Foreign Relations Committee since 2009, and has worked in Pakistan helping to calm concerns after the raid that killed Osama bin Laden, and in Afghanistan helping to build the electoral process.
During the press conference, the President highlighted the increasingly close relationship between the State Department and the DoD, pointing to the coming transition in Afghanistan, which Obama noted will require an increased role for the Department of State.
Despite downward pressure in the last weeks due to ongoing fiscal cliff concerns, the market has had a relatively strong 2012, with the S&P 500 returning 9.8% for the year. Aerospace shares have outperformed, returning 15.2%, bolstered by a positive commercial aerospace delivery outlook and healthier expectations for aftermarket suppliers. Defense Primes, while trailing the broader market, have still returned 8.6% for the year, driven in large part by strong earnings reports and operational adjustments to the uncertain contracting environment experienced throughout the year.
Big Movers
Magellan Aerospace (Up 6.2%) – Shares were up for the week following the company’s announcement that it has amended its operating credit agreement with its existing lenders and has extended its subordinated loan financing with Edco Capital Corporation.
Relevant Transactions
Woodward to acquire GE Hydraulic TRAS Business, a manufacturer of hydraulic thrust reverser actuation systems for commercial aerospace platforms, for $200 million. The acquisition, which will be integrated into the Aerospace business segment, expands Woodward’s motion control technologies and platforms.
General Dynamics acquired Applied Physical Sciences Corp., a provider of engineering and prototyping services in the fields of signal processing, marine hydrodynamics, and electromagnetics, for an undisclosed amount. The acquisition enhances the GD Electric Boat business’ rapid-prototyping capabilities.
Cessna, a Textron Company, to acquire Jet Aviation Management’s Dusseldorf and Zurich MRO Operations, providers of MRO, refurbishment, customization, and line maintenance services for commercial aircraft, for an undisclosed amount. The acquisition expands Cessna’s service presence in Europe, particularly in Germany and Switzerland where a majority of the Company’s Citation aircraft in the region are based.
