Industry Week in Review –April 6, 2018
Aerospace & Defense Update
In response to the recent trade dispute between the U.S. and China, Boeing announced that it will engage in talks to help prevent the dispute from harming the global aerospace industry. Chinese authorities said that aircraft will be included amongst the products targeted by the tariffs, however the tariffs will only be applied to smaller planes, such as Boeing’s existing single-aisle 737 and the smallest version of the 737 Max, which only have a limited number of Chinese clients. Overall, the tariffs will impact only 5% of Boeing’s 737 aircraft backlog. Even if the U.S. and China are unable to reach a trade agreement, deliveries under contract with Chinese customers are still likely to go ahead under the existing terms without having a material impact on Boeing’s short-term financial performance.
Major General David Thompson has been appointed to the newly created position of Vice Command of the Air Force Space Command and will be responsible for promoting military space operations within the Pentagon. This is the first time that a uniformed leader based in the Pentagon will be solely focused on promoting space operations, demonstrating the increasing prioritization of space within the Air Force. Major General Thompson will be tasked with increasing the role of the Air Force Space Command, elevating it into a major command.
Government Technology Solutions
In a March 26th letter, the Department of Homeland Security (“DHS”) for the first time acknowledged the existence in Washington, D.C. of rogue devices that foreign spies and criminals could be using to track individual cellphones and intercept calls and messages. Foreign powers’ use of such cellphone-site simulators, also known as Stingrays, has long been a concern, but intelligence and law enforcement agencies have been silent on the issue until recently. DHS said it has not determined the type of devices in use or who may be operating them. The devices work by tricking mobile phones into locking onto them instead of legitimate cell towers, revealing the exact location of a particular cellphone. Shutting down rogue Stingrays is an expensive endeavor that would require wireless network upgrades for which the industry has been unwilling to pay. Security-company researchers first located Stingrays in 2014 near the White House, Supreme Court, and Pentagon, among other locations, but there has been little political will to tackle the issue.
The Treasury Department’s Fiscal Service is reporting positive results from its five-month long test project using blockchain for potential fiscal asset management activities. In September 2017, the Office of Financial Innovation and Transformation began a proof concept aimed at discovering if blockchain could improve oversight and management of physical assets like computers and cellphones. Despite a significant startup effort, the results indicated that using blockchain resulted in marked improvement in both transparency and efficiency for asset management. Fiscal asset management is currently a manual, spreadsheet-based process for reconciling physical assets with status descriptions. Blockchain could streamline the process and enable property custodians to see where assets are in real time, instead of just at a moment in time, as a traditional spreadsheet does. The next step of the concept is to determine how blockchain will work once it is placed into the actual federal context and whether the added efficiency and effectiveness is worth the upfront investment.
Big Movers
ICF International (up 9.1%) – Share prices were up this week after the company was awarded two contracts to support the U.S. Department of Agriculture’s IT modernization efforts.
GKN (down 8.4%) – Share prices were down this week after the company announced it is facing a credit rating downgrade due to new debt that Melrose, the company’s new owners, is raising to finance the transaction.
Transactions
Alvarez & Marsal (“A&M”) Capital Partners has acquired Client Network Services, Inc. (“CNSI”), a provider of IT and business process outsourcing solutions to federal, state, and local government agencies. Terms of the deal were not disclosed.
Aviation Technical Services has acquired American Cooler Service Inc., a provider of heat exchangers, fuel systems, pneumatics, and electromechanical products. Terms of the deal were not disclosed.
Day & Zimmermann has acquired M2 Services Corporation, a provider of aviation and vehicle heavy maintenance, modification, painting, component repair, and overhaul services. Terms of the deal were not disclosed.
GenNx360 Capital Partners has acquired Subsea Global Solutions, a provider of underwater ship maintenance, inspection, repair, and marine construction services. Terms of the deal were not disclosed.
LDI, Ltd. has acquired Polygon Company, a provider of composite bearing, non-gelcoat composite pneumatic cylinders, and dielectric motor insulation, among others. Terms of the deal were not disclosed.
Orolia SA has agreed to acquire Talen-X, Inc., a provider of hardware and software development for GPS and Global Navigation Satellite System. Terms of the deal were not disclosed.
Superion, LLC has acquired Public Safety Corporation, a provider of technology and technology-enabled services focused on state and local government public safety projects and programs. Terms of the deal were not disclosed.
