1
Second Quarter 2014
% Change
Q1
2014
Q2
2014
YTD 2014
Defense Prime Index
2.4% 0.1% 2.5%
Defense Systems Index
8.9%
(1.4%)
7.4%
Diversified Government Services Index
(0.8%)
2.2% 1.3%
Middle Market Government Services Index
18.4%
(9.9%)
6.7%
Large Cap Aerospace Index
(1.8%)
(0.2%)
(2.0%)
Mid Cap Aerospace Index
(7.6%)
3.2%
(4.7%)
Small Cap Aerospace Index
9.1%
(3.9%)
4.8%
International Aerospace Index
(5.8%)
(3.5%)
(9.1%)
S&P 500
1.3% 4.7% 6.1%
Notable Quarterly M&A Activity
Capital Markets
ATK Aerospace & Defense and Orbital Sciences
announced a merger valued at $5.0 billion
The SI Organization acquired QinetiQ North American
Services and Solutions Group
Cobham will acquire Aeroflex Holding for $1.5 billion
Google will acquire Skybox Imaging for $500.0 million
Warburg Pincus acquired Wencor Group from
Odyssey Investment Partners
Parsons acquired Secure Mission Solutions
Industry News Quarterly Summary
Shortly after Q2 closed, AECOM announced it will acquire URS Corporation in a deal valued at $6.0 billion. The combined company
will have nearly 100,000 employees in 150 countries with 2013 pro forma revenue of $19.0 billion and EBITDA of $1.3 billion. The
acquisition, which comes on the heels of the announced $5.0 billion Orbital Sciences and ATK Aerospace & Defense merger and $1.5
billion acquisition of Aeroflex by Cobham, is a part of a growing trend in large, high value Aerospace, Defense & Government Services
transactions that may be reflective of a forthcoming consolidation.
B/E Aerospace announced June 10 that it will split into two separate publicly-traded companies, Manufacturing Co. and Services Co.
both under the B/E Aerospace brand. Manufacturing Co., with sales of $2.2 billion in 2013, nearly two-thirds of the Company's total
revenue, will focus on producing aircraft-cabin-interior equipment. Services Co., with 2013 revenue of about $1.6 billion on a pro
forma basis, will be a logistics and technical-services company serving the aerospace and oil and gas markets.
The conflict in Ukraine continues to escalate with heavily armed pro-Russian separatists holding several cities and large territories of
eastern Ukraine. The separatists are widely believed to be well supplied by the Russian government. At the time of this publication a
Malaysian Airlines 777 headed from Amsterdam to Kuala Lumpur crashed into pro-Russian controlled territory, allegedly shot down by
separatists using an advanced surface-to-air missile capable of hitting the plane at 30,000ft and killing all 298 people aboard.
The civil war in Syria has fully spilled over into Iraq with the militant Islamist group ISIS (Islamic State of Iraq and Syria) taking control
of large sections of eastern Syria and northern Iraq and declaring a caliphate (an Islamic state). The group has captured stockpiles of
weapons as well as banks and oil/gas fields securing hundreds of millions in funding and arms.
Quarterly Industry Snapshot
Source: Public Filings; Capital IQ as of 06/30/14
