First Quarter Activity Shows A 345% Increase Over A Year
Ago
The global Aerospace and Defense (A&D) sector experienced
its strongest performance in the past five quarters with regards to
total deal value, according to the most recent
PricewaterhouseCoopers LLP report, "Mission control:
First-quarter 2010 global aerospace and defense industry mergers
and acquisitions analysis". The total deal value for the
A&D sector in Q1 2010 is approximately 4.5 times that of the
lows experienced in the first quarter of 2009, while average deal
value is roughly 3.5 times that of the lows experienced in the
first quarter of 2009.
On a year-over-year basis, the total number of deals increased 8
percent to 68 deals in the first quarter of 2010 from 63 in the
first quarter of 2009. While the number of deals in Q1 2010
declined modestly compared to Q4 2009, the annualized level of
activity remains at the high end of the historical average and the
average transaction value was up by 78 percent compared to Q4
2009.
"We believe there are many catalysts in place that support
continued strength in the A&D mergers and acquisitions market
including an improving commercial aviation picture and reduced
levels of defense spending which will spur some consolidation in
the defense sector and entrée into adjacent markets," said
Scott Thompson, U.S. aerospace & defense leader at
PricewaterhouseCoopers. "This sector is trending towards more
large and mid-size deals as many A&D companies improved their
financial position during the recession."
The strength of Q1 2010 is demonstrated in the total value of
deals greater than $50 million. There were two deals greater than
$1 billion in the first quarter of 2010, with a total quarterly
deal value of $5 billion. This compares with Q3 and Q4 of
2009, when total quarterly deal value was $3.2 billion and $2.5
billion, respectively. On a year-over-year quarterly basis, total
transaction value increased 345 percent from $906 million to $5
billion for all deals with a reported value over $50 million.
The average deal value of transactions greater than $50 million
also rose to $630 million during the first quarter of 2010,
representing a 52 percent increase compared to the previous
quarter.
In the first quarter of 2010, total transaction value and
average transaction value for deals with a disclosed value also
showed significant improvements. The average transaction
value from 2001 through 2009 was $188 million. This compares with
an average transaction value of $244 million for the first quarter
of 2010.
The most notable change in the A&D mergers and acquisitions
market during Q1 2010 is the reemergence of the financial
investors, who've had minimal involvement in deal activity since
the third quarter of 2008. However, in the first quarter of 2010,
financial investors accounted for 38 percent of total deals worth
$50 million or more. This compares with approximately 13 percent in
2008 and 12 percent in 2009.
From a regional perspective, North America (particularly the
U.S.) continues to represent a significant portion of deals
measured by both number of deals and value of deals greater than
$50 million. In the first quarter of 2010, North America
represented 41 percent of deal value by target and accounted for 50
percent of the number of deals by target.
In terms of acquisitions, North America continues to represent
the largest portion of the number of deals worth $50 million or
more at 38 percent compared to the UK and Eurozone (25 percent),
Europe ex-UK and Eurozone (25 percent) and Asia and Oceania (13
percent). Additionally, the UK and Eurozone and North America
regions accounted for the majority of deal value (41 percent and 40
percent respectively), compared to Europe ex-UK and Eurozone (17
percent) and Asia and Oceania (2 percent).