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Record setting quarter for aerospace and defense M&A: report
November 3, 2015 / 5:16 AM / 2 years ago

Record setting quarter for aerospace and defense M&A: report

Workers can be seen on the moving line and forward fuselage assembly areas for the F-35 Joint Strike Fighter at Lockheed Martin Corp's factory located in Fort Worth, Texas in this October 13, 2011 handout photo provided by Lockheed Martin. REUTERS/Lockheed Martin/Randy A. Crites/Handout

WASHINGTON (Reuters) - The third quarter of 2015 saw a record $52 billion in merger and acquisition announced deals in the defense and aerospace industry, more than the whole of 2014, according to a report released by the U.S. arm of audit firm PriceWaterhouseCoopers.

“This year is already a record year, and we believe that 2016 will continue to be very active, and likely above the rolling ten-year average, which will be approximately $25 billion after 2015,” said Scott Thompson, who heads PwC’s U.S. aerospace and defense practice.

The report said that the total number of deals for 2015 was worth $64 billion, more than a 190 percent increase from the $22 billion for the whole of 2014.

“Restructuring, divestitures and spin-offs should continue to remain popular among (aerospace and defense) companies as they look to optimize their portfolios to align with their core capabilities or to simplify their operating models,” Thompson added.

The quarter has seen a number of large deals.

In August, Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) bought Precision Castparts Corp (PCP.N) for $32.3 billion, the largest deal ever in the industry.

Earlier this month Lockheed Martin Corp(LMT.N) announced that it would take over helicopter maker Sikorsky Aircraft for $9 billion. The deal is waiting for regulatory approval from China.

British aircraft services company BBA Aviation Plc also bought Landmark Aviation for more than $2 billion in September.

Thompson said he did not expect the fourth quarter mergers and acquisitions to be particularly high given the record setting third quarter. “But I do think that the broader trend is that, you know, we are in a robust environment where we will probably see activity above the average level next year,” Thompson said in an interview.

The report said that so far in 2015, 20 percent of the deals worth more than $50 million involved financial investors. That was higher than the 15 percent in 2014.

It added that North America had the highest number of mergers and acquisitions, with eight deals worth more than $50 million.

Reporting by Idrees Ali; Editing by Andrew Hay

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