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13 Jul 22. Seeking to reposition, LMI plans to sells for-profit subsidiary. LMI, a consulting firm to the U.S. government, has agreed to sell its for-profit subsidiary to a group of three investment firms in an effort to better compete for contracts and invest in new technologies.
In an interview with Defense News, Doug Wagoner, LMI’s chief executive, said the mid-tier contractor wasn’t able to reap the advantages of being a small business or a very large company.
“For a year or two, LMI realized for us to continue our growth trajectory that we would need additional investment for [both] bigger acquisitions [and] investment in technology,” Wagoner said.
These investments, he said, would help LMI become a larger player in logistics management and in analytics, especially in sectors where the company had a smaller presence, such as intelligence and space.
Wagoner said another key motivation for selling was a change in how the government buy services.
He likened it to the movie “Field of Dreams” with the famous line spoken by Kevin Costner’s character: “If you build it, they will come.” The U.S. government wants to go to vendors that already have solutions to its most pressing problems; to have solutions, companies need to be able to spend on research and development.
“They don’t want to buy just individuals or people,” Wagoner said. “You need to come to the market with a solution. That takes investment.”
The investment firms ― Declaration Partners, Capitol Meridian Partners and 22C Capital ― are familiar partners for the company, Wagoner said. A number of LMI board members have worked with them before.
In a joint statement, the leaders of the three firms expressed confidence in LMI’s ability to continue as a leading government contractor. Terms of the deal were not disclosed.
All of the roughly 2,100 LMI employees will remain, except five executives who will help lead a new start-up non-profit ― the NobleReach Foundation ― which will focus on non-profit national security work. Wagoner will stay with LMI. All proceeds from the sale of the for-profit subsidiary will go to the NobleReach Foundation. (Source: Defense News)
14 Jul 22. Kongsberg reports 12% revenue growth and new orders worth NOK 11bn in Q2 2022. Kongsberg says it increased its operating revenues by 12 per cent and grew all its business areas compared to the second quarter of last year. The EBITDA was just over NOK 1bn and the order intake came to almost NOK 11bn.
“Kongsberg maintained its good progress and had strong growth in its order intake and operating revenues in the second quarter. The order backlog has risen to NOK 54 bn. Kongsberg Maritime had a record-high order intake during the quarter and its operating revenues grew by 14%, while Kongsberg Defence & Aerospace increased its operating revenues by 10 per cent and produced an EBITDA margin of more than 20% despite continued delays in weapon station deliveries. Kongsberg Digital increased both its operating revenues and recurring operating revenues. All the business areas have grown profitably and I’m very pleased with the quarter,” says Geir Håøy, the president and CEO of KONGSBERG.
Strong order intake
Kongsberg Maritime (KM) had an order intake of NOK 6.6bn, which is 57 per cent higher than in Q2 2021. There were a large number of new orders both from the after-sales market and for deliveries to new vessels. At the same time, there is also a very good order intake from the Sensors & Robotics area, among other things linked to the Hugin family of autonomous subsea vessels.
The order intake of Kongsberg Defence & Aerospace (KDA) came to NOK 4.1bn, equal to a book-to-bill ratio of 1.52. A new significant contract for deliveries to the F-35 programme and a start-up order for deliveries of the Naval Strike Missile (NSM) to Australia were just two of the agreements entered into during the quarter.
Kongsberg Digital (KDI) continued to sign up new customers for its digital solutions, and the number of both customers and installations in operation increased. This included a contract for the delivery of a further four digital twins to one of the world’s largest oil and energy companies, as well as a contract with Mediterranean Shipping Company for the digitalisation of almost 500 vessels. In total, the Group’s order backlog increased by NOK 3.9bn during the quarter and now stands at NOK 53.8bn.
Vigilance and continual measures
The world is currently experiencing increasing inflation, logistics difficulties and component shortages. This also affects Kongsberg both directly and indirectly.
“Kongsberg’s deliveries consist to a large extent of systems and products composed of a considerable number of components. Even with the beforementioned delays linked to remote weapon stations, we feel we have a generally good overview of the component situation. We are also affected by high inflation and price rises. This requires an extra level of vigilance, and we are continually implementing measures to neutralise any negative consequences. For some of our order backlog, we have inflation adjustment clauses in the contracts. The part of the order backlog that does not have such clauses mainly consists of contracts with a shorter delivery horizon or where the cost picture is tied to subcontractors,” says Håøy.
Solid foundation for continued growth
“The current turbulent state of the world leads to more unpredictability in the short term than we have had for the past few years. At the same time, we have a solid foundation and a record-high order backlog. Our positions in both established and new markets have never been stronger. This makes me confident that Kongsberg will grasp new opportunities and while also dealing with the external challenges. In total, we expect our operating revenues to continue to grow and we are on schedule to achieve our ambitions for 2022,” concludes Håøy. (Source: Google/https://en.portnews.ru/)
13 Jul 22. Booz Allen unveils $100m venture capital fund to back tech startups. Booz Allen Hamilton, one of the 10 largest U.S. defense contractors, launched a $100m venture capital fund to invest in fledgling companies creating promising new technology.
The fund announced Wednesday, dubbed Booz Allen Ventures, will concentrate on bankrolling early-stage firms working on cutting-edge technology, and help them find ways to get those innovations into the field for use.
Brian MacCarthy, vice president of tech scouting and ventures at Booz Allen, said in a Monday interview that the fund plans to invest in four to six firms per year, providing seed money ranging from hundreds of thousands to low millions of dollars.
MacCarthy said there is a growing understanding in the defense world that more must be done to open funding streams for firms working on new capabilities such as artificial intelligence, which could in turn help Booz Allen’s government clients. He pointed to the National Security Commission on Artificial Intelligence’s 2021 final report, which recommended major new investments in AI research and development, as an example of the emerging consensus around this need.
“If we can find these capabilities and technologies, how can we be startup friendly?” MacCarthy said. “How can we be founder friendly and help get these critical technologies into the public sector?”
MacCarthy said the fund will first invest in firms concentrating on four core areas: artificial intelligence and machine learning; cybersecurity; so-called deep technology; and C5ISR, or command, control, communications, computers, cyber, intelligence, surveillance and reconnaissance.
Deep technology includes 5G, or fifth-generation network technology; augmented and virtual reality systems; and human performance technology to improve productivity and competence, MacCarthy explained.
The fund, which could invest in companies working on other technologies in subsequent years, keys off Booz Allen’s 7-year-old technical scouting division, MacCarthy said, which he headed for the last five years. This scouting program gave the company a window into where potential opportunities for considerable growth might be in emerging markets, he added.
But the company also needs to provide capital funding “at digital speed,” he said in the release announcing the effort.
“Booz Allen Ventures allows us to actively bridge the gap between opportunity and capability and accelerate the services-to-solutions transformation,” he added. “As a strategic investor at the intersection of technology and mission, we are uniquely positioned to lead, connect and convene advanced tech solutions to drive change in government, faster than ever before.”
In what MacCarthy described as “trial deals” for this fund, Booz Allen last year invested in AI and machine learning firm Latent AI, and this spring followed up with investments in two more AI companies: Synthetaic and Reveal Technology.
When deciding which companies to fund, Booz Allen Ventures will primarily consider how their capabilities and technologies could benefit Booz Allen’s own R&D processes and technical advancements. Booz Allen will also consider its own clients’ technological needs by identifying customers’ gaps that could be fixed by the startup firms.
While Booz Allen plans to fund early-stage companies, MacCarthy said, it also wants them to have at least some technologies out of the lab and in the field to demonstrate their utility. Technologies that are several years from hitting the field, such as electric vertical-takeoff-and-landing aircraft, are “just too capital intensive and not the right strategic fit for us,” he said.
Booz Allen hopes this will be an evergreen fund, and that revenues generated by the companies it invests in will fund future investments.
“This problem is certainly not going away, in getting critical and emerging technologies to the forefront,” MacCarthy said. (Source: Defense News)
13 Jul 22. Lazard sees ripe opportunities in aerospace and defence M & A,
buoyed by diversification trends. A wealth of opportunities, underpinned by industry diversification into new sectors, new technology programs in AAM and drones, new space themes and a global increase in defence spending, makes for a significant time in aerospace and defence mergers and acquistions, Michael Richter, Managing Director and Global Head of Aerospace and Defense Investment Banking Group at Lazard Frères observes, ahead of Farnborough Air Show 2022 next week.
The world’s second largest air show (eclipsed only by Paris which returns in June 2023) returning as a physical event will bring international industry players face to face again. There will be the realisation of pent-up demand in M & A, he suggests, as companies investigate adding value to their businesses through diversification, through acquisition or mergers.
So far this year (May 2022), 148 merger and acquisition transactions have been announced, versus 166 during the corresponding period in 2021. This follows a relatively strong year for M & A in 2021 with US$125 bn of deals logged, compared with US$39.8bn of deals concluding in 2020 – in the midst of the global pandemic. In 2019, activity volume totalled $119.2bn.
Noteworthy deals completed in 2021 (in the US$5 bn-plus transaction category, where Lazard is especially active) included Parker-Hannifin’s acquisition of Meggitt for $10.2bn; Viasat’s purchase of Inmarsat for $7.3 bn and Blackstone, Cascade and Global Infrastructure Partners acquiring Signature Aviation for $5.6bn. Lazard has identified a number of trends in key industry sectors that are poised to influence M & A activity based on activity these past 18 months.
Commercial Aerospace
–OEMs and Tier 1 companies continue to consolidate their customer bases (putting more eggs in fewer baskets) as sub-tier suppliers face near-term challenges on skilled workforce, raw material price inflation and industry standard price downs over the life of a contract.
–Growing interest in business aviation and fixed base operations (FBO businesses) as on-demand aviation continues to trend. Exposure to business jets is viewed favourably by investors – a diversification play away from commercial airlines as utilization levels have eclipsed prior peaks, largely driven by new users coming into the market.
–Aircraft manufacturers continue to diversify their expertise with investment activity in new-generation, alternative powered, technology platform programs, alongside newly arrived innovative entrepreneur backed ventures.
–The stabilizing of airline fleets and OEMs committed to increased build rates, especially growing interest in narrowbody (A320/B737) series aircraft.
–Significant global air cargo demand and constrained capacity is driving a growth in funding for freighter conversions and production as freighter utilization soars.
–Supply chain health continues to hinder production as specialist providers, e.g. castings and forging companies, look to ramp up and seek opportunities presented by the rebound.
Business Aviation
Airline disruption, continuing health concerns, new business aviation models and the development of air services infrastructure continue to drive a significant increase in business jet demand.
–Real time demand for business jets remains strong amongst major OEMs showing strong sequential backlog growth in Q1 2022. In the largest single market, the USA, utilization grew 22% YOY in April 2022 with increases of 26%, 14% and 23% for charter, fractional and general aviation, respectively (Argus International, May 2022.)
Aftermarket / MRO and Aviation Services
Prospective buyers continue to value businesses with aftermarket exposure, which is bolstering M & A opportunities in this sector. Examples include Unical Aviation’s sale to Platinum Equity and Carlyle’s acquisition of Signature Aviation’s Engine Repair and Overhaul Business for $230m. (Lazard advised the seller on both transactions).
–Aftermarket and MRO M & A is expected to continue to be robust as aircraft utilization increases and shifting demand and supply dynamics drive investor confidence.
–MROs that support narrowbodies will fare well as near term MRO capacity increases have shifted toward this type. The aftermarket remains a source of sustainable cash flows, relatively insulated for cycle timing with operating results more dependent on stable fleet sizes versus changing delivery schedules.
–Established MRO markets in North America and Western Europe are expected to marginally expand over the next few years. Asia Pacific, including China, will be boosted by domestic travel growth.
Space
Major new space themes, including the proliferation of small satellite constellations, is generating public and private investment in launch systems, satellites, electronics and analytics.
–Existing A&D suppliers have been actively securing a foothold in the space sector including Raytheon’s acquisitions of Blue Canyon and SEAKR Engineering, together with BAE Systems’ purchase of InSpace Systems.
–Aerospace and defence suppliers that leverage their manufacturing expertise can further diversify revenue into the space supply chain through new OEM relationships (including SpaceX and Blue Origin) as well a universe of Tier 1 and Tier 2 suppliers.
Defence
Defence primes are actively making investments in various technology programs and companies to gain access to new developments and fill product and capability gaps. Interest lies in defence electronics, C4ISR capabilities as government spend on detection, identification, tracking and IT/cybersecurity reaches record levels.
–Smaller scale M & A is expected to continue with transaction volume set to outpace commercial activity in the next 24 months.
–Larger scale M & A transactions may be more challenged in the current regulatory environment.
–US Defense budget demonstrates signs of a ‘Super Cycle’ with President Biden’s spending exceeding Trump Administration’s forecasts, as national priorities and renewed focus on warfare and technology are unlikely to lead to decreased funding levels.
–Russia’s invasion of Ukraine has highlighted the significance and necessity for the Department of Defense’s confirmed strategic shift away from anti-terrorism and counter insurgency to near peer conflicts. Defence readiness sees an increased use of UAV’s and quad drones for surveillance.
Lazard’s Aerospace and Defence Practice
Lazard has a long, revered history in the aerospace and defence sector, advising many high-profile transactions in the industry over the past decade. Announced in April 2022, the sale of Telephonics Corporation represents Lazard’s 104th Aerospace and Defence transaction (totalling over $125bn in deal value since 2013).
Recent transactions include the sale of Triumph’s Stuart, Florida Aerostructures business to Daher; Safran’s purchase of Orolia; Thales’ Ground Transportation Systems business to Hitachi and the sale pf Embraer’s Evora, Portugal operations to Aernnova.
12 Jul 22. Thales further accelerates its cybersecurity development with the acquisition of OneWelcome, a leader in Customer Identity and Access Management.
- Headquartered in the Netherlands, OneWelcome is a European leader in Customer Identity and Access Management (CIAM), an essential and high-demanded expertise within the cybersecurity market.
- OneWelcome’s identity cloud for external users, like consumers, business partners and contractors complement Thales’ workforce Identity and Access management capabilities and specifically addresses key areas such as data privacy, delegation and consent management.
- This acquisition is a new step in Thales’ strategy1 to further strengthen its leading position as a global cybersecurity player, and a leading provider of secure and trusted digital identities.
Continuing its cybersecurity expansion strategy, Thales announces the signature of an agreement to acquire OneWelcome, a European leader in the fast growing market of Customer Identity and Access Management, for a total consideration of €100 m. OneWelcome’s strong digital identity lifecycle management capabilities will complement Thales’s existing Identity services (secure credential enrollment, issuance and management, Know Your Customer etc) in order to offer the most comprehensive Identity Platform in the market.
Headquartered in the Netherlands, OneWelcome provides cloud-based customer identity and access management for highly regulated industries, empowering them to securely connect customers as well as business partners to their online services. Currently, OneWelcome protects tens of ms of European identities for lighthouse customers like Malakoff Humanis, PostNL and the European Central Bank. Thales plans to leverage this regional expertise to address the global need for enhanced identity and data privacy management.
Indeed, OneWelcome business will particularly address the increasing need for convenient and secure access, as well as data privacy, which is essential in regulated markets, subject to GDPR compliance for instance. To be noted that one of the key OneWelcome’s expertise is to grant users a greater control of their information and data, across any platform or application as it helps manage their passwords and consent preferences.
With this acquisition, Thales will offer a comprehensive Identity Platform that will allow organisations of all sizes to manage internal and external identities, enabling them to bring new businesses online fast, improving operational efficiency and customer experience along the way, while meeting or exceeding regulatory compliance.
With 100+ employees and customers across Europe, OneWelcome is experiencing strong growth of over 30% year-on-year. OneWelcome will join Thales Digital Identity and Security global business unit. Gartner predicts that by 20232, 72% of organisations will be rolling out a CIAM initiative, versus 40% in 2020.
“Customer Identity – or CIAM – is a solution tailored for any organisation with a digital presence that need to securely manage external identities and provide intuitive access to their online services. We have a state-of-the-art service that is used by European customers to connect and protect ms of users. Our highly motivated team is thrilled to expand our product leadership into new markets using the global reach of Thales.” Danny de Vreeze CEO of OneWelcome
“The acquisition of OneWelcome is fully aligned with our expansion strategy within the cybersecurity space. OneWelcome’s talents and expertise in customer identity and access management complements and strengthens our authentication and data privacy portfolio as well as our plan to provide a trusted and frictionless digital experience. Nowadays, as we see a rapid increase in amount of data, cloud migrations, and new compliance mandates, it’s essential to offer secure, adaptive and convenient solutions that help our customers in both private and public sector to classify, protect, and control the access to their sensitive data regardless of where it resides.” Philippe Vallée, Executive Vice-President, Digital Identity and Security at Thales.
In 2022, Thales plans to hire 11,000 people worldwide, including 1,000 in cybersecurity.
The transaction is subject to regulatory approvals and other customary closing conditions and is expected to be completed during the second half of 2022.
1Thales recently announced another acquisition in the cybersecurity domain: https://www.thalesgroup.com/en/worldwide/group/press_release/thales-signs-agreement-sonae-investment-management-acquire-s21sec-and.
2 Gartner – Technology Insight for CIAM May 2020 IAM
11 Jul 22. Aerojet Rocketdyne Agrees to Pay $9m to Resolve False Claims Act Allegations of Cybersecurity Violations in Federal Government Contracts. The U.S. Department of Justice (DOJ) has announced that Aerojet Rocketdyne Inc., headquartered in El Segundo, California, has agreed to pay $9m to resolve allegations that it violated the False Claims Act by misrepresenting its compliance with cybersecurity requirements in certain federal government contracts. The settlement resolves a lawsuit filed and litigated by former Aerojet employee Brian Markus against Aerojet under the qui tam or whistleblower provisions of the False Claims Act, which permit a private party (known as a relator) to file a lawsuit on behalf of the United States and receive a portion of any recovery. Mr. Markus and Aerojet reached a settlement of the case on the second day of trial. Mr. Markus will receive $2.61 m as his share of the False Claims Act recovery. On Oct. 6, 2021, the Deputy Attorney General announced the Department’s Civil Cyber-Fraud Initiative, which aims to hold accountable entities or individuals that put U.S information or systems at risk by knowingly providing deficient cybersecurity products or services, knowingly misrepresenting their cybersecurity practices or protocols, or knowingly violating obligations to monitor and report cybersecurity incidents and breaches. Information on how to report cyber fraud can be found here. The qui tam case is captioned United States ex rel. Brian Markus v. Aerojet Rocketdyne Holdings Inc., et al., Case No. 2:15-cv-02245-WBS-AC (E.D.Cal.). (Source: glstrade.com)
05 Jul 22. Indra strengthens its global leadership in simulation with the acquisition of Simumak, a company specialised in new generation training solutions. Indra, a leading global technology engineering company for the aerospace, defence and mobility sectors, has fully acquired Simumak, a company specialised in new generation tactical training solutions, with more than 5,000 simulators delivered to twenty countries around the world. The operation allows Indra to strengthen its global leadership in simulation with new solutions and capabilities that complement its current offering, gain size to advance its growth strategy in international markets, and contribute to the consolidation of the sector in Spain. Indra will also be able to develop in a much more agile manner the tactical training systems that its civilian and military customers are increasingly demanding to enhance the capabilities of their professionals much more quickly.
The simulation sector is undergoing a profound transformation with the emergence of new technologies linked to artificial intelligence, virtual reality or gamification, as well as the growing need for system interoperability. Customers are increasingly looking for end-to-end solutions that cover complete training needs, not only at the most demanding and advanced levels, for which Indra develops top-level simulators, but also at earlier stages, where more functional simulators such as those designed and produced by Simumak are required.
“This operation aligns with our strategy of making acquisitions that contribute to further accelerating our international growth in areas with strong potential, both in the civil and military fields. Indra and Simumak are highly complementary in their professional teams as well as in their product lines and customer base. This will allow us to offer a broader portfolio of training solutions and explore important new business opportunities. The collaboration is also expected to multiply development capabilities and bring significant improvements in production times,” said Ignacio Mataix, CEO of Indra.
David Morán, CEO of Simumak, points out that “Simumak joins the Indra group as an independent company with its own product line, the result of its knowledge and experience in Spain and Latin America over the last 15 years, and with scalable capabilities for the provision of training services and solutions. Becoming part of Indra will help us strengthen our product portfolio, enhance our international presence and have the business and operational capabilities of a company that is a global leader in the sector.”
Mission training, key to success: Indra and Simumak share the same vision of training that goes far beyond the pure instruction of the student in the control of a vehicle or platform and focuses on preparing the professional to complete tasks or tactical missions effectively and safely, interoperating with a multitude of systems, as they would do in real life, and acting in different types of scenarios, in which they face situations of maximum difficulty and stress.
In land-based military operations, the solutions developed by Simumak offer an enormous potential for the training of tank and armoured vehicle crews, offering them practical instruction from the onset, which accelerates the training and the detection of strengths and areas of improvement in each student. The interoperability and connectivity of the systems in turn facilitates joint virtual training of soldiers regardless of their location at different bases, thus saving time and costs and improving their readiness.
Simulator training contributes significantly to safety in operations, guarantees success in mission accomplishment and represents a significant savings in both material and human resources required to carry out such a demanding preparation.
Simulation leadership: With the acquisition of Simumak, Indra gives a new boost to its leadership as one of the largest and most cutting-edge simulation companies in the world, with a team of more than 400 professionals and more than 35 years of experience. It also doubles down on its strategy of bringing its customers the most advanced solutions incorporating the latest digital technologies. The company has developed some of the most sophisticated aircraft mission simulators in the civil and military market. It has delivered fixed wing simulators for the Eurofighter, Airbus A320, A330, MRTT and Boeing 737 as well as rotary wing simulators for the NH90, Tiger, Cougar, Chinook, Blackhawk and Seahawk, AW159 Wildcat or the EC135, H135, H225, H175, AS350, H145, EC145, Bell212, Bell412 and Sikorsky S76.
It also has a family of mission simulation systems for military ground training, having delivered to the Spanish Armed Forces the complete system for the simulation of the Leopard 2E battle tanks, the Pizarro vehicle, the Advanced Air Control simulator for the Air Force, as well as fifty Víctrix simulators, which provide soldiers with simulated training with their own weapons, in addition to the main simulators used by the Spanish Navy, such as the S80 simulator, plus other simulators for specific civilian-based training.
As a global leading company in engineering technology for the aerospace, defence and mobility sectors, Indra is its customers’ technology partner for digitisation and key operations around the world. Its team of experts and its in-depth knowledge of those businesses and the latest technology, and its leadership in major European innovation programs and projects to design the next generation of technological solutions, give it a differential offering and enable Indra to lead unique, highly innovative projects that will transform the future of these sectors on a global scale in the coming years. (Source: www.joint-forces.com)
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TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.
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