Industry Week in Review – July 18, 2014
Aerospace & Defense Update
The biannual Farnborough Air Show was underway this week, drawing major players from the aerospace industry to the historic airfield in Hampshire, England. For manufacturers, the show offers a chance to highlight new product innovations and capabilities, while for airlines, the show is an opportunity to see new designs and place purchase orders. Companies including industry heavyweights Boeing and Airbus were in attendance, as well as many smaller firms, all attempting to book purchase orders as the week-long show winds to a close. Airbus recorded orders for 496 jets valued at $75.3 billion, beating out rival Boeing’s 201 aircraft worth $40.2 billion. Their combined sales figure of $115.5 billion is lower than last year’s Paris Air Show where the rivals combined for $134.7 billion in sales. According to analyst estimates, Airbus’ great showing brings their total tally of firm orders to about 650. However, Boeing entered the week with 649 firm orders. Coupled with sales unrelated to Farnborough, at the end of the week, Boeing has 783 firm net orders for the year. Both Airbus and Boeing have already booked deals for more airplanes than they can build in 2014 alone, despite a year of record-high production numbers. However, one of the biggest stories of the week was surrounding the F-35 aircraft, valued at approximately $80 million per plane. The aircraft was absent from the air show, as the $400 billion program has had multiple setbacks recently, with the combination of stealth, maneuverability, and attack capabilities in a single aircraft making it vulnerable to multiple complications.
Government Technology Solutions Update
The Senate Appropriations Defense Subcommittee approved a bill on July 15th that would reduce the IT budget for the Department of Defense (“DoD”), as outlined in the President’s FY2015 budget, by $500 million. The Defense Subcommittee justified lower spending levels by stating their focus on prioritizing other investments, such as advanced national security technologies and DoD medical research.
The Centers for Medicare & Medicaid Services (“CMS”) awarded 15 spots on a five-year, $7 billion Indefinite Delivery Indefinite Quantity (“IDIQ”) contract, designed to help CMS develop and test payment and service delivery models for the Children’s Health Insurance Program (“CHIP”). Services under the contract will include data analytics, modeling and simulation, and program-specific research.
Big Movers
AECOM Technology Corporation (Up 10.5%) – Shares were up this week after the Company announced plans to acquire URS Corporation in a $6 billion dollar deal
Meggitt PLC (Up 10.1%) – Shares were up this week following rumors of a potential sale of the Company, including United Technologies Corporation’s plans to submit a £5.0 billion ($8.5 billion USD) bid to acquire the Company.
Relevant Transactions
AECOM Technology Corporation to acquire URS Corporation, a provider of engineering, construction, and technical services to public agencies and private sector clients worldwide. The deal is worth an estimated $6 billion.
Liberty IT Solutions LLC acquired Warrior Technology, a provider of applications and software development, program management, systems integration, information assurance, and enterprise architecture services. Terms of the deal were not disclosed.
