Industry Trends
SPAC Launches with Rocket Lab USA Merger
Rocket Lab USA Inc. will merge with a special purpose acquisition company (SPAC), Vector Acquisition Corp., at a $4.1 billion valuation. Rocket Lab is seen as a front runner among small-launch providers, having already launched 97 satellites for the government and private companies. Vector Acquisition Corp raised $300 million in an IPO in September 2020, being one of the hundreds of SPACs to do so as the investment vehicle popularity increases. Rocket Lab expects to use proceeds from the deal to fund the development of a launch vehicle tailored for use in satellite mega-constellations, space missions, and commercial spaceflight.1
CAE to Buy L3Harris’s Military-Training Business
CAE Inc. agreed to buy L3Harris Technologies Inc.’s military training division for $1.1 billion. The division includes three main businesses: Link, which provides military training; Doss Aviation, which provides flight training to the U.S. Air Force; and AMI, which designs and makes simulator hardware. The division generates $500 million in annual revenue and is expected to be based in Tampa, FL, after the deal closes. The deal will be funded by a private placement of roughly $594.4 million. CAE is a market leader in training pilots for commercial jetliners and was struck by the COVID-19 pandemic-driven slump in global air travel.2
Industry Officials Anticipate a Shakeout for Small-Launch Providers
Companies and entrepreneurs worldwide are working on more than 100 small-rocket ventures. Some ventures have already sent satellites into space supported by strong backers, while others are testing launchers using small budgets and seed money. However, given the reality that corporate, civilian, and military uses of compact satellites will not generate enough demand to support the current excess of small launch providers, competition is robust. Chuck Beames, chairman of small-satellite maker York Space Systems LLC., says that the industry cannot support 100 new launch companies. A more realistic expectation would be four healthy small-rocket operators and several established companies flying larger commercial boosters.3
Boeing-FAA Ties Still Flawed After 737 MAX Reforms
A government report concludes that U.S. aviation regulators need to strengthen their aircraft safety oversight even after recent reform. An examination of the Boeing 737 MAX certification revealed that Boeing and the Federal Aviation Administration still have a flawed relationship. Many problems in the MAX certification relate to the FAA’s inadequate independence to Boeing and other aircraft manufacturers, which may hinder the identification of safety issues. The FAA has agreed to implement 14 recommendations in the report, including how it addresses innovations introduced to existing aircraft designs.4
The Pentagon Wants Autonomous Ships, Helicopters, and Jets
The Pentagon is pushing to increase the U.S. military’s use of defense automation to counter adversaries’ technological advances. The $740 billion defense authorization bill Congress passed in January is filled with provisions to expand automation and promote autonomous operations across the services. Commercial airplane makers and their suppliers also say they have been pursuing enhanced automation, but faster progress is evident in the military. Skeptics worry automated systems sometimes reflect software developers’ desire to incorporate new capabilities without complete testing.5
Reaction Engines Takes Steps Towards Hypersonic Fighter Jets
Reaction Engines, a hypersonic propulsion company, recently completed tests that validated the design of key components required for engines capable of powering aircraft at speeds up to Mach 5. With U.S. test operations, the British company has worked for decades on these types of engines for aerospace applications, including for combat jets and assisting vehicles into space. Other engine companies are also investing in hypersonic propulsion as rapid technological advances by potential adversaries increase the interest of hypersonic technology to the west.6
Defense Information Systems Agency Director Publicly Supports IT as a Service
Defense Information Systems Agency (DISA) director, Air Force Lt. Gen. Robert Skinner, signals to maintain the department’s push to outsource IT service to increase efficiency and savings. The Air Force, Army, and Navy already have ongoing enterprise IT-as-a-service projects underway, but officials are looking to expand. Skinner cited the work from home of the last year demonstrated the need to ensure effective communication, command, and control regardless of where they are located. Skinner observed that the military should be leveraging commercial technologies, critiquing the military’s lack of mobility as a major area where the IT industry can help. 7
Largest Transactions Closed
- Target
- Buyer
- Value($mm)
- Enginetics Corporation
- Enjet Aero, LLC
- $11.50
- Mikros Systems Corporation
- McKean Defense Group, LLC
- $5.22
Source S&P Capital IQ as of 4/12/2021 and PCE Proprietary Data
Contacts
|
Data Assumptions This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only. Glossary EBIT - Earnings Before Interest and Taxes Sources:
|
