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11 Oct 18. TMD Technologies, LLC reports record business year – and now provides enhanced servicing support to meet the needs of US military radar, EW and other system upgrades.
Sustained growth
TMD Technologies, LLC (TMD-US) supplier of professional, world class, microwave and RF products based in Baltimore, Maryland has reported a record year of growth and expansion – winning several new microwave-based military programs and large and important orders from established TMD customers. Also, following the recent appointment of Tom Curtin as Vice President, Sales & Business Development, the TMD-US team has again been further strengthened with new key positions to boost its growing customer base and associated technical support operation.
Increased demand
As part of its on-going business development, TMD-US is seeing a substantially increased demand for its travelling wave tube (TWT) based amplifier diagnostics, component level upgrades, and sub-system maintenance. Said Tom Curtin: “As the US military community continues to upgrade its radar and EW platforms to extend system life, so first class, reliable technical product support, maintenance and repair has become imperative. In response to these accelerating and demanding requirements we have now invested in the equipment and human resources necessary to fully support this burgeoning side of our business.”
fast turn-around – reduced system downtime!
High power airborne, ground based and shipboard transmitter systems for radar and EW/ECM/EA applications are cycled through the TMD-US purpose-built facility for evaluation, performance upgrades and, where needed, repairs. The company’s fast and efficient turn-around time on these activities provides significant customer benefits – particularly in the form of reduced system downtime.
Fast and efficient turn-around from TMD-US – on evaluation, upgrade and repair
Continued Tom Curtin: “Our technical certifications and adherence to all required standards enables our customers to entrust us with the repair of their TMD TWTAs, ruggedized amplifiers and microwave power modules (MPMs) currently in use on active military programs. At TMD-US the growth of our service center is a vital factor in the provision of a higher level of support facilities for our US military and prime contractor customers.”
11 Oct 18. Update on the offer by Thales for Gemalto. The contemplated combination is progressing satisfactorily: 6 of the required 14 regulatory clearances have already been obtained, and the steps to obtain the remaining eight are well advanced. Thales and Gemalto are discussing with certain antitrust authorities on remedy proposals to address their concerns with respect to the General Purpose Hardware Security Modules (GP HSM) market. As a consequence, Thales and Gemalto now expect to close the offer in the first quarter of 2019.
10 Oct 18. TransDigm dives deeper into aero spare parts market with Esterline buy. Aircraft parts supplier TransDigm Group Inc (TDG.N) has agreed to buy smaller rival Esterline Technologies Corp (ESL.N) for about $3.6bn in its biggest-ever deal, as it seeks the heft to compete with Boeing Co (BA.N) and Airbus SE (AIR.PA) in after-sales plane servicing. The world’s two biggest planemakers have been pushing into the high-margin business of supplying parts and services to boost profits, threatening TransDigm, which has been building a group of parts producers and suppliers. The company has inked 49 deals since its market debut in 2006. TransDigm has a good track record of integrating some of the large acquisitions in the past, said Vertical Research Partners analyst Robert Stallard.
“Esterline fits the TransDigm M&A criteria, being majority A&D (aerospace and defense) with a large aftermarket portfolio focused on components like knobs, sensors, and materials,” Stallard wrote in a note titled “Go Big or Go Home.”
The $122.50-per-share cash offer represents a 38 percent premium to Esterline’s Tuesday close and is 62 percent more than the stock’s closing price on July 19, when reports of the company exploring a potential sale emerged. Shares of Bellevue, Washington-based Esterline hit a more than 3-year high of $115.78 in early trading, while those of TransDigm fell about 4 percent to $336.85. Esterline, which is expected to generate 2018 revenue of about $2bn, makes cockpit parts and sensors for commercial jetliners, business jets and military aircraft such as Lockheed Martin’s (LMT.N) F-35 fighter jets.
“Esterline’s core aerospace and defense business consists of primarily proprietary, sole source products with significant and growing aftermarket exposure,” TransDigm Executive Chairman Nicholas Howley said, adding that the business is highly complementary.
The deal is the latest in a string of acquisitions in the aerospace industry. Last year, United Technologies Corp (UTX.N) struck a $30bn deal to buy Rockwell Collins Inc, and Boeing said in May it would buy aerospace parts company KLX Inc in a $3.2bn deal.
TransDigm will fund the deal mainly through cash on hand and term loans.
The company said it expected the deal to add to its adjusted earnings within the first year following the close of the deal in the second half of 2019.
Reuters reported in July that Esterline was exploring a sale.
Morgan Stanley is the financial adviser for TransDigm, while Goldman Sachs is advising Esterline. (Source: glstrade.com/Reuters)
10 Oct 18. Is BAE Systems plc set to surge higher than the FTSE 100? The prospects for the BAE Systems plc (LON:BA) (BA.L) share price have improved in recent months in my view. The company could benefit from an improving global economy, with defence budgets across the globe set to rise over the medium term. Since defence budgets are often expressed aa a percentage of GDP, the strong growth delivered by the US could lead to an improving outlook for the business over the medium term.
Furthermore, with the US set to increase its military spending under Donald Trump as part of changes to budgets across US government, demand for the company’s products could increase over the next few years.
Of course, BAE has experienced a challenging period in recent years. Austerity has meant that sales growth has been tough to achieve. Compared to the performances of some of its sector peers, the business has done well in my view. It appears to have a solid balance sheet, as well as a sound strategy that could allow it to remain dominant in a number of key product markets.
With the company forecast to record a rise in EPS of 9% next year, it seems to be moving in the right direction. This could lead to an improving share price growth outlook, with a PEG ratio of around 1.6 suggesting that there could be a margin of safety.
Therefore, with a mix of internal and external growth catalysts potentially on offer, the investment outlook for BAE seems to be improving. Although there may continue to be uncertainty ahead due to the ongoing risk of a full-scale trade war, I think that the company could offer upside potential. It appears to have a favourable risk to reward ratio when compared to many of its index peers, and this could help it to outperform the FTSE 100 in the long run. (Source: News Now/investomania.co.uk)
09 Oct 18. France-Italy naval shipbuilding deal still being examined – Fincantieri. A military shipbuilding alliance between Italy and France is still being examined but will require time given its complexity, the chief executive of Italy’s Fincantieri (FCT.MI) said on Tuesday. Italy and France had aimed to outline such a deal by June after Fincantieri took control of France’s STX shipyards in February. The agreement set the groundwork for a possible wider alliance between the two countries, merging France’s Naval Group military shipyards with Fincantieri’s, with the aim of fending off competition, particularly from China and the United States.
“We are going ahead, examining the situation… everyone’s hope is to create what I call the ‘Airbus of seas’,” Fincantieri CEO Giuseppe Bono told reporters.
Bono said that without consolidation, European players would be too small to compete with international “giants”.
“The timings depend on many factors, even industrial. Nobody must lose …and we want an aggregation that creates value for shareholders, workers, as well as the country,” he said.
Separately, Fincantieri announced a deal on cooperation in the naval sector with Italian state-controlled defence company Leonardo (LDOF.MI).
Asked if that deal could lead to a broader tie-up, Bono said: “I don’t think so.”
Leonardo, which supplies combat systems and other equipment for naval ships, is expected to be part of the broader military naval alliance with France, though its role in the deal has been repeatedly questioned. (Source: Reuters)
09 Oct 18. Boeing Completes Acquisition of Leading Aerospace Parts Distributor KLX Inc. to Enhance Growing Services Business, Boeing [NYSE: BA] announced today that it has completed its acquisition of KLX Aerospace Solutions to enhance its growing services business and deliver greater value to its customers. The acquisition positions Boeing to compete and win in the $2.8trn, 10-year aerospace services market.
KLX, a major global provider of aviation parts and services in the aerospace industry, provides a clear path for Boeing’s services business to accelerate growth. Its capabilities include distribution and supply chain services. KLX currently markets and distributes products for approximately 2,400 manufacturers and offers approximately 1 million catalog items.
KLX is also a leading supplier of chemicals and composites, which complements Aviall’s portfolio, allowing Boeing to offer commercial, defense, business and general aviation customers a broader range of offerings.
“This acquisition brings together the talent and product offerings of Boeing and KLX to provide a one-stop shop that will allow us to create significant value for our customers. There are also extensive opportunities for services growth and innovation for Boeing and our supply chain that is unique to the industry,” said Stan Deal, president and CEO of Boeing Global Services. “The resulting boost in supply chain capability will allow us to better serve our customers while profitably and purposefully growing our business.”
With approximately 2,000 employees, KLX Aerospace Solutions will continue to operate from Miami with customer service centers located in more than 15 countries.
The acquisition is aligned with Boeing’s organic growth strategy, with no change to Boeing’s capital deployment strategy or commitment to returning approximately 100 percent of free cash flow to shareholders.
06 Oct 18. AERALIS enters second fund raising round as it gathers interest for its new UK jet trainer programme. DSEI 2019 debut of fuselage design planned. UK company AERALIS is courting global air forces dissatisfied with traditional pilot training systems, which typically employ a combination of dissimilar training aircraft and non-integrated ground-based training systems. The UK start-up is pioneering the world’s first modular jet aircraft system, covering all basic and advanced flying training needs with a common aircraft and training system which will reduce total lifecycle costs by at least 30%.
Having raised over £650,000 from HNWIs and received offers of £1.3M grant funding from the Welsh Government, AERALIS is now pleased to announce the launch of a £1M fund raise via Syndicate Room (www.syndicateroom.com), a major Business to Business Crowd Funding website, as part of a Phase 2 EIS-Assured funding round.
AERALIS’s Phase 2 funding, which invites interested individuals to commit by the end of October 2018, will be used to build a Concept Demonstrator of AERALIS’s unique Common Core fuselage design. The business is planning to unveil this at the global DSEI Trade Show at the Excel Centre, London, in September 2019. In the lead up to this event AERALIS will also be bolstering its marketing activity, promoting the concept to Airforce customers worldwide. A hybrid version is also being mooted as a new-gen aircraft for military aerobatic teams worldwide.
AERALIS has identified a need for 5,500 new aircraft through to 2023. Its target is at least 300 aircraft in over 10 ripe geographical markets.
Blue chip companies on board
AERALIS has garnered support from leading blue-chip companies, including Thales and Bombardier. Squadron Leader Tim Davies (ret’d), former head of RAF fast jet flying training, is lending expertise to the programme as Strategy Director. Also on the management board are Brian Hibbert, CBE, ex-Lockheed Martin and Dick Eastment OBE, former head of training at the UK MoD and BAE Systems. An advisory board, bringing significant experience across the aerospace and F1 industry has been established, including the former chair of the Royal Aeronautical Society, former MD of Airbus UK and former Technical Director of Renault F1.
“AERALIS’ disruptive proposition addresses the current lack of cost effective, end-to-end aircraft for training military pilots with its innovative modular family design based around a Common Core Fuselage. Using up to four different aircraft types –elementary, basic, advanced and operational conversion, as air forces do currently, significantly increases acquisition and operating costs at a time when defence budgets are under pressure,” commented Tim Davies.
About AERALIS:
AERALIS is the next generation of Jet Training System, featuring a modular design approach already used in the commercial airline sector to significantly reduce acquisition, training and operating costs. AERALIS’s unique design will generate significant export revenue for the UK by addressing a global market need for 5,500 new aircraft over the next 20 years whilst also inspiring a new generation of young people to study STEM subjects and join the UK aerospace sector, which is currently worth over £32Bn and employs over 120,000 people.
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Odyssey is an independent corporate finance firm which advises on acquisitions, business sales, management buy-outs and raising finance, typically in the £5m to £100m range. We have extensive experience in the niche manufacturing sector with our most recent completed deal being the sale of MacNeillie to Babcock Plc. Details can be seen at: http://www.odysseycf.com/case-study-macneillie/
As a result of this and related projects we have developed relationships with buyers and funders looking to acquire or invest in the sector. We would be happy to share further insights into the sector and to carry out reviews of businesses whose shareholders are considering an exit, acquisition or fundraise.
The review will include:
* Valuation
* Market review
* Comparative deals and structures
* Initial thoughts on buyers/ investors/ targets
* MBO viability
* Feasibility review and identification of any issues to be addressed pre-deal
There is no charge for this review.
If this is of interest we would be happy to meet at your convenience.
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