Mergers and Acquisitions in Aerospace and Defense Industry

Dublin, June 03, 2021 (GLOBE NEWSWIRE) – The report “Mergers and Acquisitions in the Aerospace and Defense Market – Growth, Trends, Impact of COVID-19 and Projections (2021-2026)” has been added ResearchAndMarkets.com to offer.

The aerospace and defense mergers and acquisitions market is expected to experience a CAGR of over 3% over the forecast period (2021-2026).

The COVID-19 pandemic has disrupted the global supply chain, affecting the aerospace and defense industries in multiple ways. Historically, the defense industry has been shielded from international shocks because states have tended to rely on domestic manufacturers for critical military equipment. The diversified supply chain that enabled defense companies to act as systems integrators rather than industrial producers has now increased transaction costs due to protectionism. Some major disruptions have also altered the production of several military equipment, while in some cases trade sanctions have made it impossible for manufacturers to maintain relationships with suppliers, particularly for high-tech goods.

However, some of the defense companies are better positioned as they won’t feel the effects of COVID-19 in the short to medium term. While production may slow down for the same reasons as aircraft manufacturing, it is unlikely that demand will be impacted over the next two years as the budgets for these projects were allocated before the pandemic and the projects are vital to national defense .

Mergers and acquisitions (M&A) in the aerospace and defense (A&D) sectors have proven to be a commercially viable business strategy as it helps participants improve their technological know-how while sharing the risks associated with technological disruptions. An M&A makes the existence of both companies easier and in most cases helps the big players to achieve comparatively faster growth than their competitors. Mergers and acquisitions are not necessarily limited to the same sector, and there are instances of such collaborations even in cross-industry companies to diversify and improve their technological capabilities to effectively meet the specific needs of a wider range of customers. However, acquiring another company also has disadvantages. A reckless decision and the acquisition of a company with high debt could result in future losses for the acquiring company. The regulations associated with M&A can also prove challenging in such transactions, as these transactions have a serious impact on a country’s economy and most mergers and acquisitions involving dominant A&D companies require the approval of the country’s legislature.

Major market trends

The consolidation in the aerospace and defense sector will continue rapidly in the years to come

The A&D sector is very capital intensive in order to compete with other companies offering similar or better products at a certain price because of the rigorous R&D programs that must be carried out to update the product portfolio and incorporate new fusion technologies into the products to offer. The high risks associated with R&D and supply chain give the sector a certain uniqueness and raise the barriers to entry for new players. The M & As in the defense sector are primarily aimed at acquiring smaller players with niche competencies in order to use the acquired know-how to upgrade the current product portfolio of the acquiring company. It has been observed that the likelihood of a defense merger is radically increased when smaller players or those with a focus on tangential industries are involved, as in the case of the United Technologies and Raytheon merger. Most established defense companies have adopted a “one-stop-shop” model that allows them to develop component-level manufacturing capabilities and reduce / eliminate OEMs’ dependency on suppliers. While the OEMs have largely benefited from the transparency of a smaller and consolidated supply chain, the affiliated suppliers are largely banking on increasing profit margins by developing domestic design capabilities and entering into long-term service contracts with well-known A&D companies. In addition, companies such as Raytheon Technologies Corporation and Safran SA have been actively focused on consolidating their capabilities vertically, taking over companies such as Rockwell Collins and Zodiac Aerospace, respectively.

The aerospace and defense sector is undergoing a strategic transformation that emphasizes the consolidation of the supplier base to avoid unnecessary costs and improve the long-term profitability of any successor organization. In 2019, United Technologies Corporation (UTC) and Raytheon Company (Raytheon) completed a stock merger to consolidate their position in the A&D sector. The merger resulted in a balanced and diverse portfolio that can meet both aerospace and defense needs, provide an enhanced R&D platform and enable strong cash flow generation. However, the upcoming defense-to-defense mergers will face a challenge due to the small number of global defense prime contractors in the form of government oversight.

USA saw major M&A deals between 2018 and 2020

The US A&D sector is mature and fragmented with multiple global and regional market players. With the major aerospace OEMs based in the US, several animal suppliers are choosing to enter or penetrate the US market through M&A. In addition, some of the existing companies are taking over other companies based in the region to expand their offerings. The multi-billion dollar merger between Raytheon Company and UTC, which was completed in April 2020, is expected to benefit both companies based on potential synergies such as a possible combination of UTC’s Pratt & Whitney F-35 JSF engines with Raytheon’s Patriot missile defense products and Expertise in areas such as radar, ammunition and cybersecurity. Several further acquisition transactions were also announced in June 2019. For example, Boeing announced the acquisition of the EnCore group and Parker Hannifin Corporation announced the acquisition of Lord Corporation. M&A activity is also increasing in the Asia-Pacific region, as several OEMs open manufacturing facilities in Asia.

Key topics covered:

1 INTRODUCTION

2 RESEARCH METHOD

3 SUMMARY

4 MARKET DYNAMICS
4.1 Market overview
4.2 Market drivers
4.3 Market Restrictions

5 MARKET SEGMENTATION (Market Size by Value – USD billion)
5.1 Sector
5.1.1 Aerospace
5.1.1.1 Significant M&A deals in 2018-2020
5.1.2 Defense
5.1.2.1 Significant M&A deals in 2018-2020
5.2 geography
5.2.1 North America
5.2.2 Europe
5.2.3 Asia-Pacific
5.2.4 Latin America
5.2.5 Middle East and Africa

6 COMPETITIVE LANDSCAPE
6.1 Company profiles
6.1.1 The Boeing Company
6.1.2 Raytheon Technologies Corporation
6.1.3 Airbus SE
6.1.4 General Electric Company
6.1.5 Saffron SA
6.1.6 BAE Systems plc
6.1.7 Parker Hannifin Corporation
6.1.8 L3Harris Technologies, Inc.
6.1.9 Leonardo SpA
6.1.10 Thales Group
6.1.11 Elbit Systems GmbH
6.1.12 Rolls-Royce plc
6.1.13 Honeywell International Inc.
6.1.14 Rheinmetall AG

7 MARKET OPPORTUNITIES AND FUTURE TRENDS

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