Mission control: Fourth-quarter 2015 aerospace & defense industry mergers and acquisitions analysis

April 2016


Mission control: First-quarter 2016 aerospace & defense industry mergers and acquisitions analysis

Despite a decline in volume, deal value in the Aerospace & Defense sector increased more than two-fold.in the first quarter of 2016, driven in part by a $5.9 billion megadeal.

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Mission control is PwC's quarterly analysis of merger and acquisition (M&A) activity in the global aerospace & defense sector. It provides an overview of the most recent M&A results and our expectations for future deal activity.

Highlights of what this quarter's analysis revealed:

  • A $5.9 billion merger will create the defense industry’s largest government services providers, with an expected $10 billion in annual revenue
  • A withdrawn bid for stock swap valued at $89.2 billion may be a precursor for things to come for M&A in the A&D sector
  • Deal volume by financial investors accounted for 25% of the quarter’s activity, while inorganic expansion by strategic investors continues to be a key driver for local deal activity
  • Strong demand in the sector continues to drive Aerospace OEMs
  • While backlogs and orders remain strong, cost and value gaps are narrowing and commodity volatility continues, a potential sign that production rates may be going too high too fast
  • Driven by strong balance sheets, defense companies are looking to expand product lines and increase scope
  • While consolidation by major weapons manufacturers is unlikely, niche technologies remain attractive

Download the analysis to review all the key trends from 1Q16.

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