Industry Week in Review – March 1, 2019

KippsDeSanto & Co. Industry Week in Review – March 01, 2019

Industry Week in Review – March 1, 2019

Aerospace & Defense Update

President Trump is expected submit his 2020 defense budget proposal to Congress in the coming weeks. The total proposal is anticipated to be approximately $750 billion, representing a ~5%, or $34 billion, increase from 2019 defense spending levels. Of the projected $750 billion, $174 billion will be placed in the overseas contingency operations (“OCO”) to circumvent budget caps. The $750 billion is nearly the amount military leaders estimated would be sufficient to enact the National Defense Strategy and rebuild and modernize the U.S. military.

European aerospace giant, Airbus, is pursuing innovative strategies to differentiate itself in the space market as budget constraints and new market entrants from the U.S. and China have reduced the company’s market share over the past several years. Through its new partnership with American owned OneWeb communications, Airbus intends to shift its satellite manufacturing procedures from constructing large custom build spacecrafts to mass producing hundreds of inexpensive satellites. Airbus plans to install at least 650 satellites using OneWeb’s assembly line in Florida over the next several months with aspirations to later build satellite constellations for other satellite operators using the Florida facility.

Government Technology Solutions

In a move to be in closer proximity to its defense, intelligence, and critical infrastructure customers, Pasadena-based Parsons Corporation announced it is relocating its headquarters to Northern Virginia. Parsons already has 2,400 employees in the Washington, D.C. area—compared to 2,000 in its Pasadena location. CEO, Chuck Harrington, said they are strategically positioning themselves near key influencers: “Proximity to these influencers increases Parsons’ opportunities to advance our Enhance-Extend-Transform growth strategy and capitalize on our current momentum. Simply said, being in Northern Virginia gives us more opportunities to be in the right places, at the right times, with the right people driving the future of our markets.” The shift will neither result in moving the 2,000 employees out of Pasadena nor cutting jobs, according to CFO, Virginia Grebbien.

Big Movers

Maxar Technologies (Down 16.4%) – Share prices were down again this week after missing revenue expectations and the Company cutting its dividend.

Transactions

ManTech International Corp. has agreed to acquire Kforce Government Solutions, Inc. (“KGS”), a wholly-owned subsidiary of Kforce, Inc., a provider of information technology, transformation management, and data management solutions in support of federal health and defense customers. The deal is worth an estimated $115 million. KippsDeSanto & Co. is acting as the exclusive financial advisor to Kforce, Inc. on the divestiture of KGS.

Hexagon AB has agreed to acquire Thermopylae Sciences and Technology, LLC, a provider of geocentric web and mobile-based software products that work together to create user-focused, collaborative solutions for common problems. Terms of the transaction were not disclosed.

Teijin Ltd. has agreed to acquire Renegade Materials Corporation, a provider of heat-resistant thermoset pre-preg composites. Terms of the deal were not disclosed.

Windjammer Capital has acquired Hermetic Solutions Group, a provider of advanced hermetic packaging and components. Terms of the deal were not disclosed.

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