Global aerospace and defense deals insights: Q1 2017

 

Executive summary

The global aerospace and defense industry began 2017 with increased investment interest leading to a 41% deal value increase in comparison to a year ago. Although total deal volume and value declined against the 2016 peak reached last quarter, announced deals values for Q1 17 were buoyed by the $9 billion Safran-Zodiac transaction. As industry demand rises due to greater defense spending and increased deliveries of large commercial aircraft, we expect M&A volumes to grow as 2017 progresses.

The current geopolitical landscape will also impact the industry. As the US intensifies its involvement in the Middle East and cross-continent conflicts, defense spending is expected to rise. At the same time, emerging economies are also looking to increase their defense spending. Despite global trade risks, the aerospace and defense industry is expected to benefit from the prevailing tense scenario.

 

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

Bob Long, US Aerospace and Defense Deals Leader

Key trends/highlights

  • Deal volume and value declined by 47% and 20%, respectively, in comparison to the previous quarter.
  • Although only ten deals were announced, deal values were positively impacted by Safran SA’s announced acquisition of Zodiac Aerospace SA, a $9.4 billion transaction.
  • A second megadeal (deals >$1 billion), was announced between MDA and Digital Gloe for $2.1 billion. 
  • Despite these two large deals, value for the quarter was off from Q4 16 by 20%.
  • Strategic investors continue to lead, accounting for 90% of transactions and 95% of deal value. However, external investments are expected to increase in the future due to mid-market consolidation.
  • Although North American deals accounted for 60% of volume, deal value for both North America and Asia and Oceania substantially decreased in comparison to Q4 16.

For our full report and additional information on the top 10 deals announced for the year, our regional and subsector analyses, and the outlook for this sector, please remember to download our:

Global aerospace and defense M&A deals insights: Q1 2017 update.

Contact us

Bob Long
US Aerospace and Defense Deals Leader
Tel: +1 (703) 918 3025
Email

Chuck Marx
Principal, US Aerospace & Defense leader
Tel: +1 (602) 364 8161
Email

Scott Thompson
US Aerospace and defense leader
Tel: +1 (703) 918 1976
Email

Randy Starr
US Aerospace and Defense Strategy& Leader
Tel: +1 (973) 236 5682
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Dean Gilmore
US Global Aerospace & Defense Leader
Tel: +44 7970 665555
Email

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