Industry Week in Review – October 28, 2016

Rockwell Collins announced that it inked a deal to buy B/E Aerospace for ~$8.3 billion, valuing B/E at $62 / share, a 22.5% premium over the prior Friday’s closing share price. The proposed deal would consolidate two of the biggest aircraft systems manufacturers, increasing their ability to cross-sell electronics and plane fittings, as well as position Rockwell to lead the development of the “smart” aircraft. This acquisition will allow Rockwell to improve its content on aircraft, as well as give it more direct exposure to commercial airlines.

GE recently abandoned its bid to purchase the German 3D printer maker SLM Solutions for $745 million, and instead purchased a privately held German 3D printing firm, Concept Laser, for $599 million. Elliot Advisors, which acquired a blocking stake of 20% of SLM, rejected GE’s bid blocking GE from meeting its 75% minimum acceptance threshold. GE also raised its bid to purchase Arcam to $696 million. Arcam, Concept Laser, and SLM are three of the world’s top makers of machines for metals-based 3D printing. GE’s recent investment in 3D printing allows it to produce parts more efficiently than traditional production methods used by competitors.

Government Technology Solutions Update

The Defense Logistics Agency (“DLA”) recently made public the Government Accountability Office’s (“GAO”) ruling which rejected Oakland Consulting Group’s protest on the $6 billion J6 Enterprise Technology Services (“JETS”) contract. Oakland had originally filed a protest against DLA when the agency eliminated the company from competition on JETS. DLA cited a lack of detail from Oakland on its original proposal, and that the thoroughness of the original proposal was inadequate to sufficiently address the requirements DLA was seeking. GAO’s decision to deny the protest was made, in part, because in its protest Oakland was “repeating – essentially verbatim – the statements made in its initial protest.” With the GAO’s decision, DLA is now free to begin making awards on JETS, expecting to make awards to bidders in three different levels of competition – 8(a), small business, and full & open – and across 21 various IT task areas.

The General Services Administration (“GSA”) kicked off the next phase of its “Making it Easier” initiative which aims to reduce barriers to entry which have historically prevented or significantly dissuaded some small businesses from engaging with the Federal government. One of the initiatives rolled out was a quick start guide for the IT Schedule 70 Roadmap. The GSA hopes that this can be used as a reliable resource for potential contractors to use to guide them through the process of winning Federal business. Recently, the GSA has also placed emphasis on making the contracting processes faster and more efficient, especially for smaller startup companies, which they believe can bring crucial and innovative solutions to the Federal marketplace. According to numbers released by the GSA alongside the announcement of these new initiatives, the average time it takes for a small business to get on a Federal schedule is only 31 days – and two days for a contract modification – as a result of efforts made in the past year to increase engagement with smaller businesses.

Big Movers

B/E Aerospace (up 17.6%) – Shares were up this week after Rockwell Collins announced it has entered into a definitive agreement to acquire B/E Aerospace.

Curtiss-Wright (up 6.9%) – Shares were up this week after Curtiss-Wright announced its profit increased 36% since 3Q15.

Transactions 

Cognosante, LLC has acquired Business Information Technology Solutions, Inc. (BITS), a provider of IT consulting, health solutions, enterprise resource planning, and business analytics primarily to healthcare clients in the Department of Defense (“DoD”), Department of Health and Human Services (“HHS”), and the Department of Veterans Affairs (“VA”). Terms of the deal were not disclosed.

General Electric Co. has agreed to acquire a 75% stake in Concept Laser GmbH, a provider of powder-bed based laser additive manufacturing machines. The deal is worth an estimated $599 million.

Hearst Corp. has agreed to acquire CAMP Systems International, Inc., a provider of software-as-a-service (“SaaS”) solutions that manage and track the maintenance of jets, turbo prop aircraft, and helicopters. Terms of the deal were not disclosed.

Precision Castparts Corp. has acquired Atlantic Precision, Inc., a provider of 3D metal printing and additive manufacturing technologies for customers in the aerospace and defense industries. Terms of the deal were not disclosed.

Rockwell Collins, Inc. has agreed to acquire B/E Aerospace, Inc., a provider of cabin interior products for commercial aircraft and business jets. The deal is worth an estimated $8.3 billion.