Boeing’s China Recovery Hampered Due to Airline Crash
On March 22, Boeing’s shares closed 3.6% lower, and attempts to regain market share within the biggest aircraft market were hindered after the deadly crash of a China Eastern Airlines 737-800. China is currently the largest market for the 737-800 model, with 1,200 aircraft in service. Since the crash, China Eastern Airlines halted all 737-800 flights until the cause is determined.1
Defense Firms Prepare for Potential Tax to R&D Expenses
The 2017 Tax Cuts and Jobs Act requires companies to capitalize and amortize research and development expenses beginning fiscal years after December 31, 2021. The new tax law will cause billions of dollars in additional taxes from U.S. defense companies. Defense company executives say the tax law discourages investment in innovation and are optimistic that Congress will repeal or defer the law in 2022.2
Defense Industry Gets Tougher on M&A Antitrust Activities
Lockheed Martin’s $4.4 billion deal to acquire missile supplier Aerojet Rocketdyne was blocked by the Biden Administration in an attempt to prevent further consolidation within the industry. M&A activity has picked up dramatically within the defense industry in the past 30 years. Facing historical consolidation within this industry, the Department of Defense looks to focus on M&A activity and pursue antitrust investigations to preserve competitiveness and innovation amongst contractors.3
Pentagon Seeks to Expand Small Business Participation
Participants in the Department of Defense’s Small Business Programs stand to benefit from a new Pentagon strategy to maximize participation from small defense contractors. This development comes as the U.S. defense industry has shrunk by over 40% in the last decade. The Pentagon seeks to attract new entrants and innovators participation in the program.4
Largest Transactions Closed
- PAE Incorporated
- Amentum Government Services Holdings LLC
Other Financial Buyer Transactions Closed
- West Star Aviation, LLC
- The Sterling Group, L.P.
- Firefly Aerospace Inc.
- AE Industrial Partners, LP
Other Strategic Buyer Transactions Closed
- SMC Aerospace Ltd
- G.S. Precision, Inc.
- Paravion Technology, Inc.
- Dart Aerospace Limited
- Pioneer Industries, Inc.
- Flight Support Group, Inc.
- Swift Aviation Services, Inc.
- Jackson Jet Center, LLC
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.
EBIT - Earnings Before Interest and Taxes