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PwC: Global Aerospace, Defense M&A Hit $72B in 2017

A new PwC report says the value of global mergers and acquisitions in the aerospace and defense sector reached $72 billion in 2017, exceeding the previous record of $67 billion set in 2015.

PwC reported that A&D companies worldwide recorded 454 M&A transactions last year with an average deal size of $411 million.

Significant deals in the A&D sector cited in the study include United Technologies Corp.’s (NYSE: UTX) pending $30 billion buy of Rockwell Collins (NYSE: COL); Northrop Grumman’s (NYSE: NOC) $9.2 billion purchase of Orbital ATK (NYSE: OA); Thales’ $5 billion merger deal with Gemalto; and Safran’s acquisition of Zodiac Aerospace for approximately $8 billion.

The record A&D deal value in 2017 reflects a 79 percent rise from the deal value posted in 2016 and is 7 percent higher than the record set in 2015.

Bob Long, U.S. A&D deals leader at PwC, said strong deal activity in the defense sector was driven by the current administration’s increasing defense budgets, focus on missile defense and geopolitical tensions.

Long noted that defense contractors plan to increase investments in artificial intelligence, cybersecurity, autonomy and other technologies.

“Tax reform will provide increased liquidity which, combined with continued strong growth in aviation and a return to growth in defense, should result in another strong year of M&A in 2018,” he added.

North America posted a 29 percent increase in M&A deal activity last year, while Europe’s deal activity declined by 20 percent.

The analysis also showed that the transaction value in the arms and vehicles sector doubled in 2017 due to large deals in the U.S., South Korea and China driven by geopolitical tensions.

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