Defense and aerospace merger activity sees 'soft start' to 2017 – CNBC

Defense and aerospace industry mergers slowed in the first three months of the year compared with the fourth quarter but activity should pick up for the remainder of 2017, predicts a new report.

Aerospace and defense industry deal value reached $13.8 billion in the first quarter of 2017, representing a decline of about 20 percent compared with about $17.1 billion in M&A activity in the fourth quarter, according to a report released Thursday by PricewaterhouseCoopers, the accounting and consulting services firm.

“Despite a relatively soft start to the year, we are optimistic that deal activity will recover and return to prior year levels,” the PwC report said. “Defense spending increases and geopolitical factors will certainly play a part in the prevalence and magnitude of dealmaking through the rest of 2017.”

Scott Thompson, national leader of PwC’s aerospace and defense practice, said the 10-year pace of the industry is for M&A dollar volume of around $25 billion annually. “We will probably continue at a pace which is above the 10-year average,” he said, adding that such a scenario would mean there’s still probably about “$18 billion or more” worth of new deals still to come by year’s end.

Besides greater defense spending, PwC sees increased deliveries of large commercial aircraft helping to boost M&A volumes as the year progresses, too.

According to Thompson, the commercial aircraft segment is “a very, very attractive place to be” given strong passenger growth by the global airline industry. That has resulted in more carriers replacing their aging fleets of jets or in ordering new planes to expand service.

Overall, there were 10 M&A deals in aerospace and defense in the first quarter, down 47 percent from 19 in the fourth quarter of 2016. The report also said strategic investors continued to lead the deal activity

Read More Here...

This entry was posted in Aerospace News. Bookmark the permalink. Follow any comments here with the RSS feed for this post. Trackbacks are closed, but you can post a comment.