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BUSINESS NEWS

January 11, 2019 by

10 Jan 19. Brazil approves Boeing-Embraer tie-up with new commitment to keep local jobs. The Brazilian government on Thursday said it would allow a proposed tie-up between planemakers Embraer SA (EMBR3.SA) and Boeing Co (BA.N) to go forward, capping weeks of uncertainty in which President Jair Bolsonaro expressed hesitation. The approval maintains the terms of the deal as previously proposed, with Embraer selling 80 percent of its commercial plane division, its most profitable, for $4.2bn (£3.3bn) to Boeing, which will have total control of the new venture.

But one thing was new: the government said in a press release that the two planemakers would “maintain the current jobs in Brazil,” a move that might appease union workers and politicians who had raised concerns that, if the deal went through, Boeing would then try to slash jobs. The companies had previously been noncommittal on the issue.

The tie-up between Embraer and Boeing is seen as part of a reshaping of the global aviation market for mid-sized planes. It follows a similar deal by Boeing’s rival Airbus (AIR.PA) which bought Bombardier Inc’s (BBDb.TO) commercial plane division that competed with Embraer.

The deal still must now be voted on by Embraer’s private shareholders within the next 30 days, but winning the backing of Brazil’s government was its biggest hurdle. If approved by shareholders, the companies will then have to seek regulatory approval. The deal also faces legal challenges in Brazil. Workers and left-wing politicians obtained court orders blocking the deal in December, but the injunctions were quickly reversed. The tie-up could face future injunctions as the cases remain pending. Minority shareholders have also filed legal complaints that have yet to be resolved.

Embraer and Boeing said in a statement they expect the deal to obtain final approvals before the end of 2019.

Shortly after assuming the presidency on Jan. 1, Bolsonaro, a former army captain, had expressed concern that Boeing might end up owning all of Embraer if the deal was approved under the terms proposed. But on Thursday, a statement from his office said his government had analysed the proposal and found that it “preserves (Brazil’s) sovereignty and the national interests.” (Source: Reuters)

09 Jan 19. Parsons acquires geospatial intelligence provider OGSystems. California-based Parsons Corp. announced Jan. 8 it has acquired OGSystems, which provides advanced technologies in geospatial intelligence, big data analytics and threat mitigation. According to a press release, the move follows “a series of strategic investments” and is the third acquisition by Parsons in the last 14 months. Terms of the deal were not disclosed.

OGSystems’ main customers include the National Geospatial-Intelligence Agency, the National Reconnaissance Office, and Special Operations Command. The company’s VIPER Labs and Immersive Engineering techniques were the catalysts for deployment of geospatial systems and software, embedded system threat analytics and cloud engineering solutions, the release stated.

“OGSystems will expand our position in critical markets, including space operations, cybersecurity, critical infrastructure, and beyond,” Carey Smith, Parsons’ chief operating officer, said. “Parsons’ existing artificial intelligence and cloud computing expertise will augment OGSystems’ support for customers demanding more efficiency in analyzing overwhelming volumes of geographic imagery and data.”

Parsons’ last major acquisition, in May 2018, was Polaris Alpha, which provides innovative mission solutions for complex defense, intelligence, security customers and other U.S. federal government customers.

Parsons noted at the time that its artificial intelligence, signals intelligence and data analytics expertise supporting defensive and offensive cybersecurity missions will be expanded by integrating Polaris Alpha’s machine learning, data, video, multi-source analytics and automated reasoning technologies. Moreover, Polaris Alpha’s portfolio of electromagnetic warfare, signals intelligence, space situational awareness and multidomain command and control technologies will “significantly increase the scale and scope of Parsons’ capabilities and customer relationships.”

“Parsons’ strategy is focused on disruptive, differentiated technologies demanded in high-growth, mission-oriented programs in the defense, intelligence, and critical infrastructure sectors,” Chuck Harrington, Parsons’ chairman and CEO, said following the acquisition of OGSystems.

“The actionable intelligence that geospatial imagery and data analytics brings to Parsons’ portfolio through OGSystems is a game changer. Whether informing our national security customers’ mission planning or designing tomorrow’s resilient smart city, Parsons now brings deeper intelligence expertise to the challenge.” (Source: C4ISR & Networks)

09 Jan 19. Hanwha Group merges defence businesses. The Hanwha Group has established a new subsidiary, Hanwha Defense, by merging its existing affiliates Hanwha Land Systems and Hanwha Defense Systems.

Following the announcement to merge Hanwha Land Systems and Hanwha Defense Systems during a general shareholders meeting in October 2018, a shareholder vote was conducted on 3 January, resulting in the official approval of the merger and the renaming of the resulting entity to “Hanwha Defense”.

Hanwha Defense is now responsible for manufacturing the large majority of land systems, including the K9 Thunder self-propelled howitzer and K21 infantry fighting vehicle, for the Republic of Korea Armed Forces. (Source: IHS Jane’s)

09 Jan 19. Kellstrom Defense purchases military aircraft parts maker WAM. US-based Kellstrom Defense Aerospace (KDA) has acquired Williams Aerospace and Manufacturing (WAM), a military aircraft spare parts and ground support equipment manufacturer. Financial details of the transaction have not been disclosed by the companies. However, KDA noted that the total global sales of the combined companies are expected to exceed $160m for this calendar year. Based in San Diego County, California, US, WAM has been a Lockheed Martin Hologram Product Program licensee since 1987. As part a long-term agreement, WAM is a licensee for the P-3 and C-130 and produces parts for the C-5, F-16 and other US original equipment manufacturer (OEM) defence platforms.

According to the company, KDA Engineered Products operating segment will benefit with the addition of WAM’s manufacturing capabilities. Following the completion of the deal, WAM will still retain its brand identity in the market.

KDA CEO Chris Celtruda said: “The addition of Williams Aerospace and Manufacturing to our group of companies adds a significant breadth of capability that supports our strategic growth plans and the needs of our global customer base. We expect to rapidly integrate the Williams Aerospace and Manufacturing business while investing in product development to expand our solution set for military aircraft sustainment.”

WAM co-owners William Cary and Shane Nonthavet said: “Joining the KDA team offers the right solution for us to continue to be engaged with our employees and customers while creating new opportunities for future growth.”

PNC Mezzanine Capital and Barings have served as financial backers for KDA while Blue Torch Capital acted as lead arranger for the senior debt financing. Houlihan Lokey served as KDA’s financial adviser and placement agent for the transaction. (Source: army-technology.com)

09 Jan 19. Mergers: Commission to Assess Acquisition of Chantiers de l’Atlantique by Fincantieri. The European Commission has agreed to the request submitted by France and Germany asking it to look at Fincantieri’s proposed acquisition of Chantiers de l’Atlantique in the light of the EU Merger Regulation.

The Commission considers that the transaction could harm competition at European and global level. The proposed acquisition of Chantiers de l’Atlantique by Fincantieri does not reach the turnover thresholds set by the EU Merger Regulation for transactions notifiable to the European Commission because of their European dimension. However, the plan was notified for authorisation in France and Germany.  France submitted a referral request pursuant to Article 22(1) of the EU Merger Regulation. This provision allows Member States to request that the Commission examine a concentration that does not have an EU dimension but affects trade within the single market and threatens to significantly affect competition within the territory of the Member States making the request. Germany joined the referral request submitted by France.

On the basis of the information provided by France and Germany, and without prejudice to the outcome of its exhaustive investigation, the Commission considers that the transaction could significantly harm competition in shipbuilding, in particular in the global cruise ship market.

The Commission also concluded that it was best placed to examine the potential cross-border effects of the transaction. Therefore, the acquisition of Chantiers de l’Atlantique by Fincantieri will be fully examined by the Commission.

The Commission will now ask Fincantieri to notify the transaction.

Background

Fincantieri is an Italian shipbuilding group, the bulk of whose capital is held by Cassa depositi e prestiti, itself majority-owned by the Italian State. The Fincantieri group is mainly active in the design and construction of merchant vessels, military vessels and specialised high-end offshore vessels. It also provides services to ship owners and designs and manufactures mechanical equipment. Fincantieri is Europe’s largest shipbuilder.

Chantiers de l’Atlantique is a French shipbuilding company based in Saint-Nazaire, the bulk of whose capital is held by the French State through the Agence des participations de l’État (the French Government shareholding agency). Chantiers de l’Atlantique is mainly active in the design and construction of passenger ships. It also provides services to ship owners. More information on the transaction will be available on the Commission’s competition website in the public case register under case number M.9162.

(defense-aerospace.com EDITOR’S NOTE: The acquisition of France’s Chantiers de l’Atlantique shipyards by Italy’s Fincantieri state-owned shipbuilding group, was the basis for the planned merger of the military activities of Fincantieri and Naval Group (formerly known as DCNS), the French state-controlled naval shipbuilder.

Set up through a complex deal agreed last summer, the merger was agreed on paper but never implemented because of the deteriorating relations between Paris and Rome.

Some observers say that by asking the EU Commission to rule on the acquisition, France is hoping that the deal will be stopped without its having to pay the political price for reversing its agreement, and without appearing to turn its back on the consolidation of the European defense industrial base that it has long been calling for.) (Source: defense-aerospace.com/European Commission)

08 Jan 19. UK fraud office narrows Rolls-Royce corruption probe. Regulator whittles down list of suspects in years-long investigation. The charges against Rolls-Royce include paying tens of millions in bribes to win engine and other contracts in Indonesia, Thailand, China and Russia. The UK’s Serious Fraud Office has narrowed the field of suspects in its investigation into bribery and corruption at Rolls-Royce, in a sign that a final decision on which executives should face charges could be nearing. The SFO confirmed on Monday that it had notified a number of individuals in recent weeks that they were “no longer suspects in the Rolls-Royce investigation”, adding: “The investigation continues in relation to a number of individuals.” While some people have been ruled out of the probe, charging decisions are not believed to be imminent in the years-long investigation. The company itself admitted a range of charges in January 2017 as part of a deferred prosecution agreement with the SFO and authorities in the US and Brazil. Sir John Rose, former chief executive of Rolls-Royce, is not believed to be one of those contacted. Sir John has previously denied wrongdoing and has not been charged with any offence. His lawyer declined to comment. Lawyers representing several other former senior executives said they had not been contacted by the SFO, and in some cases had not received any update on the investigation for several months. Rolls-Royce said on Monday it “continues to co-operate fully with the authorities, including ongoing co-operation as the Serious Fraud Office pursues inquiries into individuals. We note the latest action taken by the SFO, but will not comment on individual cases”. The SFO announced it was formally investigating Rolls-Royce in December 2013. The charges against the company included falsifying accounts to hide the illegal use of local middlemen, attempting to thwart investigations into corruption, and paying tens of millions in bribes to win engine and other contracts in Indonesia, Thailand, China and Russia. According to the deferred prosecution agreement, evidence of corruption was found in its civil aerospace, military and former energy businesses over a period of more than 20 years, while the UK allegations stretched back as far as 1989 and ran to 2013. As part of the deal, Rolls-Royce agreed to pay £671m in fines, including a record £497m to the SFO. Dozens of former Rolls-Royce executives were questioned under caution after the prosecution deal was confirmed. Lisa Osofsky, who took over as SFO director four months ago, told the Commons justice committee in December that she was personally reviewing the evidence in more than 70 cases, to see why it was taking so long to conclude investigations and reach decisions on charging companies and individuals. (Source: FT.com)

07 Jan 19. Rockwood Portfolio Company Ibis Tek, Inc. Announces Purchase of Standard Bent Glass, LLC. Combined entity now is the largest supplier of transparent armor to the Department of Defense. Rockwood Equity Partners announced today that its portfolio company, Ibis Tek, Inc. (“Ibis Tek”) (www.ibistek.com) has acquired Standard Bent Glass, LLC (“SBG”) (www.standardbent.com), the industry’s premier supplier of custom fabricated glass products, including transparent armor.

Headquartered in East Butler, Pa., SBG has been a leader in security and defense glass products for more than 30 years. Its Department of Defense product line is one of the most extensive in the country, and it provides products, including transparent armor, across numerous platforms. The company also has produced specialty glass for high profile architectural projects worldwide, including the Freedom Tower in New York City.

Headquartered in Butler, Pa., Ibis Tek specializes in manufacturing transparent and opaque armor solutions for military vehicles, in addition to a wide range of complementary products, such as vehicle lighting and accessories. It also provides first responder vehicle customization for commercial and military vehicles.

The combined entity, a new name for which is forthcoming, now is the largest supplier of transparent armor to the Department of Defense, with significant growth opportunities in reach.

“SBG is a perfect, ‘hand in glove’ strategic fit with Ibis Tek,” said Ibis Tek CEO Vince Nardy. “SBG’s capability to fabricate specialty glass, together with Ibis Tek’s expertise in commercial vehicles, now provide significant opportunities to take on new programs that leverage our combined expertise in providing armored solutions to the military, as well as complementary vehicle capabilities.”

Mike Hartley, who served as CEO of SBG, will continue to serve the combined company as a senior advisor. “15 years ago, the two neighboring companies first worked together to offer transparent armor products in support of our military,” he said. “It is exciting to see that relationship come full circle, now as a combined enterprise that will provide one-stop-shop capabilities with flat and curved transparent armor, metal fabrication, certified welding, paint and coating, electrical assembly and system integration for vehicle upfitting.”

Now, leadership of the combined company, which will remain a small business, will continue executing on a growth plan to leverage its capabilities in transparent armor manufacturing and technology expertise to support the Department of Defense and U.S. warfighters. (Source: BUSINESS WIRE)

07 Jan 19. GKN to close Isle of Wight facility? Sources close to BATTLESPACE suggest that Melrose is looking at the closure of the GKN Isle of Wight facility following a company visit there in late December. As Melrose struggles with the GN acquisition at a time of market uncertainties the sources suggest that even with its excellent technology and composite expertise the Isle of Wight facility is ‘too remote.’ It seems that the fears Jack Dromey expressed at the time of the Melrose bid are sadly coming to pass with most of the management of GKN Aerospace now being run from Holland. Labour MP Jack Dromey said: ‘The hostile takeover by Melrose of GKN is not in the British national interest. Shareholders should act responsibly, therefore back GKN and not hide behind anonymity.’ As reported in the Daily Mail.

07 Jan 19. Unifly Raises $16.7m in Series B Funding Round. Unifly, a Belgium-based drone traffic management provider, has raised a total of 14,6m Euro (16,8m US$) in a B-round, bringing the total invested capital so far to 2m Euro (26,5 US$). Investors in this new round of financing include the existing shareholders QBIC, PMV, Terra Drone and the management, as well as the Deutsche Flugsicherung (DFS), the German national Air Navigation Service provider.

The proceeds will be used to continue to develop the software and to establish an international sales and support organisation to solidify our position as the Global Leader in Unmanned Traffic Management (UTM).

Marc Kegelaers, CEO of Unifly: “A few years ago, we decided to develop our UTM platform to be very robust and scalable so that it could  serve as the  foundation of the strategic infrastructure needed to enable the drone services industry. The fact that the Deutsche Flugsicherung –  the National ANSP of Germany who has been working with our software for the last two years – participates in this round and becomes an important  shareholder of Unify is testimony to the success of our strategy.”

Prof. Klaus-Dieter Scheurle, CEO of DFS.: “DFS and Unifly share the same vision about what needs to be done to enable this dynamic drone market. The unique combination of the leading UTM software provider and our knowhow as one of the major Air navigation Service providers in Europe”. (Source: UAS VISION)

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