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Weekly Roundup November 21 – November 23, 2016: L-3 Squeezes Buy in Before Rate Hike

November 21 – November 23, 2016

A Note From Our President & Founder Jim Garrettson

Interest rates are all but certain to go up in December and one large defense contractor has seemingly gotten ahead of the game to make one more big buy before the Federal Reserve moves.

L-3 Communications announced after the close Tuesday it has put down an initial $280 million for U.K.-based MacDonald Humfrey Automation, a provider of screening technology to airports around the world, in a push by the former to increase its aviation security market presence.

NYC-based L-3 will pay an additional $37.5 million depending on MacDonald Humfrey’s performance from 2017 to 2019 post-transaction.

This deal brings L-3’s total acquisition announcements this year to nearly $480 million since the company offloaded its government services business in February to focus on technology products and platforms along with aerospace maintenance and training work.

That sale of “National Security Solutions” to CACI gave L-3 an approximate $550 million warchest for the latter’s capital deployment strategy that includes shareholder returns and acquisitions.

L-3 COO Chris Kubasik signaled in October to investors the company planned to continue its search for targets and said the contractor “may announce a few more before the end of 2016 or early next year.”

Interest rates went up last December after four years of near-zero levels that encouraged heightened M&A activity everywhere and certainly helped spur the well-documented GovCon deal spree.

With three weeks left before the Fed meets again, contracting industry observers now watch to see if anyone else gets ahead of the game.

Or like Kubasik hinted, whether L-3 will continue its trademark as an active buyer.


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Former Honeywell Defense & Space Chief Carey Smith Joins Parsons as Federal Unit Head
Smith’s career at the global industrial conglomerate also included four years as president of its U.S. government services business.
Air Force Picks 16 Firms for $11.4B Fielded Active Weapon Tech Services IDIQ
“Contract Field Teams” awardees will compete for task orders to carry out maintenance and other support work under the potential seven-year vehicle.
Lockheed to Modernize South Korea F-16s Under $1.2B USAF Foreign Sales Deal
South Korea aims to extend the service life of its F-16 Fighting Falcon Fleet through the FMS transaction.
BAE’s US Subsidiary Awarded $86M Navy Combat Systems Integration Contract
BAE Systems Inc. intell lead DeEtte Gray said the business aims to help the Navy achieve interoperability of deployed systems.
Mark Gray: ASRC Federal to Continue Support for NOAA Satellite Operations Facility
ASRC Federal’s CEO said the company will work with NOAA to take in weather and environmental data.
Washington Headquarters Services Awards 3 Spots on $240M Professional Engineering Services Vehicle
WHS sought industry help to carry out responsibilities in statutory and regulatory policy, plus human capital functions.
General Dynamics to Split Bath Iron Works, NASSCO Leadership Roles
The retiring GD Frederick Harris added leadership responsibilities for the BIW shipyard in 2013 in addition to his NASSCO president role that started in 2006.
NIH Seeks Industry Input on Digital Scientific Data Sharing, Mgmt & Citation Strategies
Vendors have until Dec. 29 to submit information on available methods to share and manage scientific data.
NOAA, NASA Launch Lockheed-built GOES-R Weather Satellite
GOES-R will work to offer weather forecasters satellite imagery every 30 seconds to track storms, hurricanes and other severe weather conditions.

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