A new PwC report says the value of merger and acquisition deals in the global aerospace and defense sector reached $52 billion in the third quarter of this year alone, surpassing the M&A deal value the sector has recorded for any full year.
According to PwC's Mission Control report, significant deals in the sector during the quarter included Lockheed Martin's purchase of helicopter manufacturer Sikorsky Aircraft from United Technologies Corp. for approximately $9 billion and Berkshire Hathaway's estimated $32 billion acquisition of Precision Castparts.
Chuck Marx, U.S. A&D leader at PwC, said companies in the sector have divested information technology services and other “lower-margin businesses” and spun off business units in an effort to streamline operations, align capabilities and access growing markets.
“Interest rates are low, financing is readily available, carrier operating costs have come down, including low oil prices and demand is surging despite overall macro weakness in key regions,” Marx wrote.
He also cited the 300 percent increase in activist investments in the sector over the past decade.
“Activists tend to move quickly and are willing to consider a wide range of strategic options that range from business operations to portfolio-level decisions, and have continued to take big positions in the commercial aerospace sector,” Marx said.