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Second Quarter 2015
% Change
Q1
2015
Q2
2015
YTD
2015
Defense Prime Index
7.6%
(5.7%)
1.5%
Defense Systems Index
7.8%
(4.5%)
2.9%
Diversified Government Services Index
1.6%
(8.2%)
(6.8%)
Middle Market Government Services Index
0.6%
(8.4%)
(7.9%)
Large Cap Aerospace Index
5.8%
(4.8%)
0.8%
Mid Cap Aerospace Index
7.2%
(6.0%)
0.8%
Small Cap Aerospace Index
5.8%
(8.9%)
(3.7%)
International Aerospace Index
11.0%
(1.1%)
9.7%
S&P 500
0.4%
(0.2%)
0.2%
Notable Quarterly M&A Activity
Capital Markets
Veritas Capital acquired StandardAero from Dubai Aerospace
Global Defense & National Security Systems will acquire STG for $165.5M
PAE, a portfolio company of Lindsay Goldberg, acquired A-T Solutions from
CI Capital Partners
Ultra Electronics will acquire Kratos Electronic Products Division for $265M
TransDigm Group acquired Pexco for $336M
Marlin Equity Partners acquired Fidelis CyberSecurity Solutions from
General Dynamics
Lindsay Goldberg acquired an equity stake in ECS Federal
Industry News Quarterly Summary
In April and June, OPM discovered two separate but related network breaches that exposed the background investigation records and personal data
of federal employees. OPM investigators concluded the cyber breach resulted in the theft of 4.2 million individuals’ personal data, 21.5 million
Social Security Numbers, and approximately 1.1 million fingerprint records.
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OPM is actively addressing potential network weaknesses and was
midway through implementation of a redesigned, secure system when these attacks were made.
On April 24
th
, BAE Systems announced plans to divest its services businesses, which operate within the US-based Intelligence and Security
division. BAE will focus on strengthening its core combat platforms: Aerospace and Defense Electronics, Armored Vehicles, Naval Guns, Munitions,
and Warship Modifications.
Computer Sciences Corporation (CSC) announced in May that it will split into two independent publicly traded entities: one to serve global
commercial and government clients and one to serve public US sector clients.
Harris Corp. completed its $4.8 billion acquisition of Exelis on May 29
th
. Following the completion, Harris released reorganization plans to structure
the company around four business segments: Communication Systems, Critical Networks, Electronic Systems, and Space and Intelligence
Systems.
On June 15
th
, United Technologies Corp. (UTC) announced plans to sell Sikorsky Aircraft. UTC received interest from Airbus, Boeing, Textron, and
Lockheed Martin. Shortly after Q2 close, Lockheed Martin announced a definitive agreement to acquire Sikorsky for $9.0 billion.
NASA’s New Horizons probe reached Pluto on July 7
th
after a nine-year and three-billion-mile journey. The historic $720 million Pluto mission will
record enormous amounts of data around the uncharted world that will take 16 months to transmit back to researchers on Earth.
On July 8
th
, SRA International filed for an IPO. SRA was taken private by Providence Equity Partners on July 2011 for $1.9 billion.
Quarterly Industry Snapshot
Source: OPM Office of Communicaitons
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; Public Filings; Capital IQ as of 06/30/15