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1
First Quarter 2015
Notable Quarterly M&A Activity
Capital Markets
Harris Corporation will acquire Exelis for $4.8B
SAIC acquired Scitor from Leonard Green & Partners for $790M
Alcoa will acquire RTI International Metals for $1.5B
TransDigm acquired Telair Cargo Group from AAR Corp for $725M
RBC Bearings will acquire Sargent Aerospace & Defense from Dover
Corp for $500M
Maximus acquired Acentia from Snow Phipps for $300M
Accenture Federal Services acquired Agilex Technologies
KeyW acquired Ponte Technologies and Milestone Intelligence
Group
% Change
Four
Weeks
Q1
2015
52
Weeks
Defense Prime Index
(1.3%)
7.6% 20.1%
Defense Systems Index
1.2% 7.8% 6.6%
Diversified Government Services Index
(5.6%)
1.6% 19.3%
Middle Market Government Services Index
(6.2%)
0.6%
(15.9%)
Large Cap Aerospace Index
(2.5%)
5.8% 5.7%
Mid Cap Aerospace Index
2.5% 7.2%
(2.6%)
Small Cap Aerospace Index
2.2% 5.8%
(4.7%)
International Aerospace Index
0.2% 11.0%
(12.2%)
S&P 500
(1.9%)
0.4% 9.7%
Industry News Quarterly Summary
The President, the Senate Armed Services Committee, and the House Armed Services Committee (HASC) proposed three differing
dollar amounts for the 2016 Defense Budget, but all in excess of the sequestration caps mandated by the 2011 Budget Control Act.
The HASC passed a policy bill which authorizes $585.1 billion in spending; $495.9 billion in discretionary funding and $89.2 billion in
the overseas contingency operations (OCO) account. This bill will next head to the floor of the full House of Representatives for a vote
in May. The President’s budget proposal was $585.3 billion; $534.4 billion in discretionary spending and $50.9 billion in OCO funding.
The FAA proposed a framework of regulations allowing routine use of certain small unmanned aircraft systems (UAS) in the current
aviation system. The proposal offers safety rules for small UAS (under 55 pounds) conducting non-recreational operations. The rule
would limit flights to daylight and visual-line-of-sight operations. It also includes extensive discussion of the possibility of an additional,
more flexible framework for “micro” UAS under 4.4 pounds. The FAA is also exploring how to further leverage the UAS test site
program and an upcoming UAS Center of Excellence to further spur innovation at “innovation zones.”
President Obama agreed to slow US troop drawdown in Afghanistan and to keep a majority of the 9,800 troops currently stationed
there beyond 2015.
Ashton Carter was sworn in as the new Secretary of Defense on February 17, replacing Chuck Hagel.
Orbital Sciences and ATK completed their merger on February 9, creating a $5.0 billion, 16,000-person space, defense and aviation
systems developer and manufacturer.
Engility completed its $1.3 billion acquisition of TASC; the combined company totals 11,000 employees and $2.5 billion in revenue.
Quarterly Industry Snapshot
Source: Public Filings; Capital IQ as of 03/31/15