Sponsored by TCI International Inc.
21 Dec 22. US defence firms boost financial backing for tech start-ups. Several large US defence contractors have recently formed or expanded venture capital (VC) arms to invest in start-ups whose cutting-edge technology could have military applications. Independent VC firms are also making more funding available for defence-related tech start-ups.
Representatives of these VC entities say they are responding to the US Department of Defense’s (DoD’s) calls for the defence industry to develop new technology quickly to help the United States counter growing threats, especially from China. Russia’s February 2022 invasion of Ukraine reinforced that message, which has also been bolstered by growing US defence budgets.
“There’s a clear increase in interest to get involved in defence tech investing, and I think that’s associated with geopolitical events and an increased awareness and interest in deploying advanced technologies that start-ups are developing to the defence marketplace,” Daniel Ateya, managing director of RTX Ventures, Raytheon Technologies’ VC arm, told Janes.
Underpinning the growing appeal of start-ups is a belief that many significant technological advances will come not from big defence contractors but from new, fast, albeit high-risk businesses.
20 Dec 22. Domitilla Benigni, CEO & COO opened Elettronica’s yearly press conference in Rome. This is their annual opportunity to announce their latest news and the important results achieved by the company over the past twelve months.
New products were launched in our core market in 2022 particularly in the Land segment.
The tri-national GCAP-GLOBAL COMBAT AIR PROGRAMME has been officially launched
+20% Market Volume Growth
Order acquisitions are broken down as follows:
European market and consortia €200m (54%)
International markets (non-EU) €168m (46%)
New sales Areas and Contracts
In 2023 new sales offices will be opened in Egypt and Pakistan and a local company will be created for logistical support in Saudi Arabia.
Launch of E4Shield and Elthub acquisition
Elettronica also recently approved the 100 percent acquisition of the American company Solynx in which it held a minority stake and which in the past was largely only a vehicle for technological scouting. The aim is to make Solynx more structurally present in the US market.
The increased corporate value proposition sees the entry into the Biodefense market. With reference to Space, last year Elettronica launched a new product, the Zenithal Jammer. The acquisition of 70% of EltHub, made during the year, further enhances the potential in the space and in the adjacent markets.
20 Dec 22. L3Harris Link 16 Acquisition Obtains All Regulatory Approvals. L3Harris Technologies (NYSE:LHX) announced today obtaining all regulatory approvals for its acquisition of the Tactical Data Link product line – commonly known as Link 16 – from Viasat.
“We are in position to close this acquisition much earlier than expected, which means we can welcome our new employees and begin work even earlier on this important modernization effort,” said Christopher Kubasik, L3Harris CEO and Chair. “The team is excited to deliver advanced tactical data links for this broadly used network, which will give our warfighters distinct advantages in multiple domains.”
The company announced the signing of a definitive agreement to acquire the TDL network on October 3, 2022, with the deal originally expected to close in the first half of 2023. With U.S. regulatory and allied partner approval now obtained, the deal is expected to close by January 3, 2023.
The product line, comprised of nearly 450 employees and generating approximately $400m in annual sales, is installed in more than 20,000 U.S. and allied platforms around the world enabling warfighters across multiple domains to securely share voice and data communications. L3Harris plans to modernize the technology, adding advanced tactical data links to the existing Link 16 network, achieving a level of resiliency relevant for evolving electronic warfare environments and JADC2 requirements.
About L3Harris Technologies
L3Harris Technologies is an agile global aerospace and defense technology innovator, delivering end-to-end solutions that meet customers’ mission-critical needs. The company provides advanced defense and commercial technologies across space, air, land, sea and cyber domains. L3Harris has more than $17bn in annual revenue and 47,000 employees, with customers in more than 100 countries. (Source: BUSINESS WIRE)
19 Dec 22. Experts forecast smooth path for L3Harris-Aerojet acquisition.
Though regulators sought to block Lockheed Martin’s bid to acquire Aerojet Rocketdyne last year, they are far more likely to let the propulsion firm’s proposed deal with prime contractor L3Harris Technologies go through, experts said Monday.
The deal, if approved, would see the country’s only independent solid rocket motor maker bought by the sixth-largest American defense firm, L3Harris, in a deal valued at $4.7bn. Pending government approvals, the deal is expected to close in 2023.
The U.S. Federal Trade Commission filed a lawsuit in January to block Lockheed’s $4.4bn takeover of Aerojet because the FTC opposed the prospect of the vertical consolidation. But the newly proposed combination would be horizontal, with no material competitive overlaps, according to former deputy undersecretary of defense for industrial affairs Jeff Bialos.
“This will have a considerably easier time than the Lockheed-Aerojet deal,” said Bialos, now co-chair of global law firm Eversheds-Sutherland’s aerospace, defense and security group.
Though Lockheed said it would have allowed Aerojet to continue as a merchant supplier of propulsion equipment to the entire industry, the FTC’s complaint against the deal alleged Lockheed had previously tried to sway Aerojet against selling its wares to rival firms.
Bialos, who has previously represented both L3Harris and Aerojet, said L3Harris should be helped by its track record as a merchant supplier of various technologies.
“It remains to be seen whether the regulatory agencies would give much cognizance to that, but I think the Defense Department would take that seriously because the history is there,” Bialos said. “According to the FTC, there was no merchant supplier mentality at Lockheed.”
L3Harris is banking that regulators will approve the deal, according to the public terms. If the government is not satisfied by the deal and it’s scuttled, L3Harris would have to pay Aerojet a $406m “reverse-breakup” fee.
“They are making a bet,” Bialos said of L3Harris.
The two companies, in their announcement, say the deal offers the country a “strengthened merchant supplier.”
“We’ve heard the Defense Department leadership loud and clear: they want high-quality, innovative and cost-effective solutions to meet both current and emerging threats, and they’re relying upon a strong, competitive industrial base to deliver those solutions,” L3Harris Chairman and CEO Chris Kubasik said in the statement.
A key opponent of the Lockheed’s takeover bid, Massachusetts Democratic Sen. Elizabeth Warren, said she would be scrutinizing Aerojet’s new plans to be acquired.
“Further corporate consolidation in the American defense industry raises both antitrust issues and national security concerns. As a Senate Armed Services Committee member, I opposed Aerojet’s previous failed deal and continue to closely monitor antitrust enforcement against defense contractors,” Warren said in a statement.
The antitrust advocacy group American Economic Liberties Project on Monday equated the new deal to the Lockheed deal, saying it would be unwelcome consolidation.
“It’s a case of deja vu,” the group’s national security director, Lucas Kunce, said in a news release. “Antitrust enforcers did the right thing last time, blocking an acquisition of Aerojet by a major prime contractor, and they should do it again. To create the competition that the warfighter and the taxpayer desperately need, we should be talking about break-ups, not acquisitions.”
The Biden administration has indicated that it would subject mergers to a “heightened review” in a report that came out earlier this year, so this deal will likely be carefully screened, according to Cynthia Cook, of the defense-industrial initiatives group at the Center for Strategic and International Studies.
“That said, every deal is different,” Cook said. “This merger should not trigger the same concerns as the failed Lockheed Martin takeover, as this looks more like a move toward increased diversification for L3Harris rather than one representing increased consolidation for a particular sector.”
L3Harris would gain a rocket motor supplier amid an “explosion in missile production demand,” driven by aid to Ukraine’s fight to repel Russia, U.S. arms transfers to NATO allies and Taiwan, and increases in Army, Navy and Air Force spending on long-range fires in a potential China fight, analyst Jim McAleese, of McAleese and Associates, said in a note Monday.
The transaction would further L3Harris’s efforts to “enter adjacent markets in big bites,” while letting Aerojet stay mostly intact and gain access to capital for future opportunities, according to Brett Lambert, a former Pentagon industrial policy official in the Obama administration, now with the Densmore Group consultancy firm.
Those capitol opportunities come as as Aerojet is facing a more competitive landscape, with several startups ― X-Bow Systems, Estes Energetics, Firehawk Aerospace and Adranos ― entering its corner of the market, said analyst Byron Callan of Capital Alpha Partners.
For Wall Street, it’s an open question whether L3Harris will be able to sustain its profit margins and invest at a level that will allow Aerojet to stay ahead of new players, Callan said.
Cowen Washington Research Group’s Roman Schweizer and Gautam Khanna said in a note to investors Monday they “expect a thorough but quick FTC review” and “expect approval but concede the current FTC is anti-consolidation.”
Ahead of the Pentagon’s budget release next year, Cowen forecasts Russia’s invasion of Ukraine will drive a 46% increase in Pentagon spending across more than two dozen major weapons and munitions programs through 2027. Nine contain rocket motor content from Aerojet, a key component and rocket motor supplier to Boeing, Lockheed Martin and Raytheon ― which helps make Aerojet an attractive purchase.
“Aerojet has key [intellectual property] and manufacturing capabilities for solid- and liquid-fueled rocket for space launch, hypersonics, missile defense and strike weapons (all of which we believe will grow equal/better than DoD’s top line),” Schweizer and Khanna said.
(Source: Defense News Early Bird/Defense News)
20 Dec 22. HKATG Rename Its Subsidiary As Aspace Satellite Technology Limited. As Mainland China and Hong Kong have successively lifted several anti-epidemic measures, the economy is back on the normal track. Many companies are actively expanding new businesses to optimize their balance sheet. Among them, Hong Kong Aerospace Technology Group (HKATG; 1725. HK) announced after the market closed on 14 December, announcing the renaming of the indirect wholly-owned subsidiary, and plans to cooperate with various independent third parties in areas such as development and manufacturing of commercial satellites, satellite communication, satellite monitoring, control and data receiving, and intelligence applications of satellite data. The expanding the business scope, the Group expects to capture a share of the satellite communications market worth over US$ 20bn.
According to the announcement, the Group’s indirect wholly-owned subsidiary, namely “Hong Kong Satellite Manufacturing Limited” will be renamed as “Aspace Satellite Technology Limited) (“Aspace”), and plans to engage in satellite manufacturing (such as development, design and testing of satellite payloads, communication satellites, navigation augmentation satellites and remote sensing satellites), satellite communications (including integrated satellite Internet communications) application services) and satellite launch (provide commercial launch sites and launch test services for commercial satellites) together with Aspace. The management of the group believes that these changes will benefit the expansion of its existing aerospace business, and at the same time enhance its market awareness and brand effect.
New Trends in Satellite Communications
According to ABI Research, by 2030, the global satellite communication service revenue will reach 141bn US dollars. Although the world will be impacted by the pandemic in 2020, telecom operators in various countries have not slowed down the construction of 5G network infrastructure; as of July 2021, there are 177 commercial 5G telecom operators in the world, of which coverage and penetration rate of the Chinese market ranks first in the world, with more than 500m users. However, the application services on the consumer side of satellite communications have not yet seen breakthrough development, so there is still considerable room for development in this area.
At present, satellite communication revenue mainly comes from satellite TV. Due to breakthroughs in LEO technology and the gradual realization of the Starlink project in recent years, the market size of global commercial low-orbit satellites is estimated to exceed US$ 50 bn. Some people may think that satellite communication is somehow unreachable it has already been applied in our daily life. The iPhone 14 released by Apple in September introduces Emergency SOS via satellite, and the Huawei Mate 50 allows users to send short messages and map out routes using the BeiDou navigation satellite system. What’s more, Xingji Shidai Technology Co. Ltd held by Chinese automaker Geely Holding also plans to launch mobile phone products that can be connected to low-orbit satellite communication technology next year. These new market trends show that satellite communication will become a major direction for future smartphones.
The higher the altitude, the fewer the number of satellites required to obtain full earth coverage, but it is usually more costly to launch satellites to higher altitudes. With the significant reduction in rocket launch costs and the continuous upgrading of satellite precision manufacturing technology, the current cost for low-orbit satellite manufacturing has been fully reduced, coupled with the maturation of satellite communication services supported by mobile phones, low-orbit satellites have become an important solution for the current commercial aerospace industry ecology.
HKATG is a leading enterprise in Hong Kong’s “space economy”, its satellite intelligent manufacturing center located in the AMC Premises adopts flexible, intelligent, and mass production methods to greatly reduce costs and improve efficiency at the same time. During the year, HKATG signed strategic cooperation agreements with several organizations. One of the partners, D-Orbit, has offices in Italy, the United Kingdom, Portugal and the United States. It focuses on the development, manufacture, and operation of the space vehicle ION satellite carrier, and offers state-of-the-art logistics technology and transportation solutions; the partnership will help HKATG optimize operating costs and improve satellite manufacturing technology. In the future, its subsidiaries will fully develop a satellite communication business, which will help the group to expand its territory in the Greater Bay Area Smart cities and the global commercial aerospace market. (Source: PR Newswire)
19 Dec 22. Honeywell (NASDAQ: HON) has agreed to resolutions with the U.S. Department of Justice (“DOJ”), U.S. Securities and Exchange Commission (“SEC”), and the Brazilian authorities (the Federal Prosecution Service (“MPF”), the Comptroller General of Brazil (“CGU”), and the Attorney General of Brazil (“AGU”)) to resolve previously disclosed anti-corruption investigations into the Company’s historical operations in Brazil in relation to Petróleo Brasileiro S.A. (“Petrobras”) and, with respect to the SEC resolution, also relating to historical conduct involving the intermediary, Unaoil. In connection with the resolutions, the Company will pay a total of $202.7m in penalties, disgorgement, and prejudgment interest.
As part of the resolutions, Honeywell’s subsidiary, UOP, LLC (“UOP”), has entered into a three-year Deferred Prosecution Agreement (“DPA”) with the DOJ related to charges of conspiracy to violate the Foreign Corrupt Practices Act (“FCPA”) in connection with a project awarded in 2010. UOP entered into leniency agreements with both the MPF and the CGU/AGU related to the same matter in Brazil. Honeywell agreed to certain compliance and compliance reporting obligations but was not charged criminally in this matter. Honeywell also agreed to a resolution with the SEC that resolves allegations relating to the Brazil conduct, as well as conduct relating to a foreign subsidiary’s contract with the intermediary, Unaoil, in Algeria, executed in 2011. These resolutions entirely resolved the Petrobras and Unaoil investigations.
As has been disclosed in previous public filings (most recently in 3Q 2022), these matters have been fully reserved and no additional financial impact has occurred as a result of these resolutions.
Honeywell has received full credit for its cooperation with this investigation. In the many years since the events occurred, the company has meaningfully redesigned and continued to evolve its global ethics and compliance program to meet the evolving risk environment. The SEC acknowledged that Honeywell had “strengthen[ed] its ethics and compliance organization.” The Department of Justice echoed this assessment, acknowledging that Honeywell and UOP “engaged in extensive remedial measures . . . including strengthening its anticorruption compliance program by investing in its compliance resources” and has committed to “continuing to enhance its compliance program and internal controls.” Honeywell will not be required to have a monitor and will instead provide reports on its anti-corruption compliance program to the Brazilian authorities and DOJ for one and three years respectively.
Honeywell has been publicly recognized as Honeywell is a seven-time honoree of Ethisphere’s World’s Most Ethical Companies award, including in every year since 2019. Honeywell was also named #3 of America’s Top 10 Most Transparent Companies overall and #1 in the Industrials segment in Labrador’s 2022 U.S. Transparency Awards for its public disclosures.
“We are pleased to have this legacy matter behind us, as these events in no way reflect the current leadership, culture and values that Honeywell has come to establish over a decade since this activity occurred,” said Darius Adamczyk, chairman and chief executive officer of Honeywell. “We stand behind our recognized world-class ethics and compliance program and all Honeywell employees are expected to abide by all laws in the countries in which we operate and conduct themselves with the highest levels of integrity at all times.” (Source: PR Newswire)
19 Dec 22. Rocket Lab delays first U.S. launch, cuts revenue forecast. Rocket Lab USA Inc (RKLB.O) cut its revenue forecast for the fourth quarter on Monday after it delayed the first launch of its Electron rocket from U.S. soil to January, sending its shares down about 5% in extended trading.
The rocket maker said that due to the delay, revenue for the mission will be recognized in the first quarter.
The company said it delayed its mission from December due to bad weather conditions, adding that the National Aeronautics and Space Administration (NASA) and the Federal Aviation Administration (FAA) also needed more time to complete regulatory documentation.
The delay in documentation left two days in a 14-day launch window which were unsuitable for “Virginia Is For Launch Lovers” mission due to bad weather, the company added.
The mission, the first of three launches for HawkEye 360, will deploy three satellites for the geospatial analytics provider, when it launches in January next year.
Rocket Lab, which has been launching rockets from New Zealand, cut its fourth-quarter revenue forecast to between $46m and $47m from $51m to $54m. (Source: Google/Reuters)
19 Dec 22. DroneShield On Track for Another Record Results Year. DroneShield Ltd (ASX:DRO) (DroneShield or the Company) is pleased to advise it is on track to post another all-time high record revenue and cash receipts for the 2022 calendar year.
DroneShield CEO, Oleg Vornik, commented: “DroneShield has posted record results every year since the listing in 2016. This year, we are on track to post another record set of results, as the counterdrone industry continues to rapidly grow globally, with DroneShield as a pioneer and global leader in this segment.”
2022 has been a year of a number of significant achievements as the Company and the counterdrone sector globally continue to mature. Some of the highlights include:
- Recommendation by JCO (part of the U.S. DoD) for rollout of DroneShield systems, as part of the SAIC consortium, across U.S. Department of Defense installations nationwide
- Multiple $1m+ sales across US, European and global Government agency blue chip customer base
- $3.7m investment into DroneShield by Epirus Inc, a high-growth U.S. technology company developing software-defined directed energy systems that enable unprecedented counter-electronics effects and power management solutions to optimize power efficiency in defense and commercial applications
- New partnerships with Teledyne FLIR, Nearmap, Allen Vanguard and XRG, while strengthening and making additional sales through existing partnerships with BT and Thales
- First U.S. civilian airport deployment
- Launch of regional NSW testing facility
- Deployments at Davos and IRONMAN Texas.
In 2021 (the Company operates on calendar year-end), DroneShield has posted $10.6m in revenue and $14.7m in cash receipts (itself a record at the time).
The cash receipts for 2022 will be released to market in January 2023, as part of the 4C quarterly report. The revenue will be included as part of the 2022 Annual Report, to be released in February 2023.
About DroneShield Limited
DroneShield (ASX:DRO) provides Artificial Intelligence based platforms for protection against advanced threats such as drones and autonomous systems. We offer customers bespoke counterdrone (or counter-UAS) and electronic warfare solutions and off-the-shelf products designed to suit a variety of terrestrial, maritime or airborne platforms. Our customers include military, intelligence community, Government, law enforcement, critical infrastructure, and airports globally.
18 Dec 22. L3Harris Technologies (NYSE: LHX) and Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) together announced the signing of a definitive agreement for L3Harris to acquire Aerojet Rocketdyne for $58 per share, in an all-cash transaction valued at $4.7bn, inclusive of net debt.
This marks L3Harris’ second acquisition announcement of 2022, demonstrating its continued focus on delivering critical capabilities to warfighters while strengthening the nation’s defense industrial base through increased competition.
“We’ve heard the DoD leadership loud and clear: they want high-quality, innovative and cost-effective solutions to meet both current and emerging threats, and they’re relying upon a strong, competitive industrial base to deliver those solutions,” said Christopher E. Kubasik, L3Harris CEO and Chair. “With this acquisition, we will use the combined talents of more than 50,000 employees to drive continuous process improvement, enhance business operations and elevate the performance of this crucial national asset.”
A proven provider of world-class propulsion systems and energetics to the DoD, NASA and other partners and allies worldwide, Aerojet Rocketdyne has a 100-year heritage of excellence delivering some of the most significant moments in space exploration and discovery, while leading the industry with investments in rocket propulsion that support America’s warfighters and enhance integrated deterrence.
The acquisition will ensure the defense industrial base and our customers will have a strengthened merchant supplier to effectively address both current and emerging threats – and promote scientific discovery and innovation – through targeted investment in advanced missile technologies, hypersonics and more.
“This agreement will accelerate innovation for national security propulsion solutions while providing a premium cash value for our shareholders and tremendous benefits for our employees, customers, partners and the communities in which we operate,” said Eileen P. Drake, CEO and President of Aerojet Rocketdyne. “Joining L3Harris is a testament to the world-class organization and team we’ve built and represents a natural next phase of our evolution. As part of L3Harris, we will bring our advanced technologies together with their substantial expertise and resources to accelerate our shared purpose: enabling the defense of our nation and space exploration. This is an exciting new chapter for Aerojet Rocketdyne and our over 5,200 dedicated team members, providing them with additional opportunities, and we look forward to working closely with L3Harris to complete this transaction.”
Aerojet Rocketdyne currently generates approximately $2.3bn in annual revenue. The company’s employees operate primarily out of advanced manufacturing facilities in Canoga Park, California; Camden, Arkansas; West Palm Beach and Orlando, Florida; Huntsville, Alabama; Orange, Virginia; Redmond, Washington; Stennis Space Center, Mississippi; Jonesborough, Tennessee; and Carlstadt, New Jersey.
The cash acquisition will be funded with existing cash and the issuance of new debt. The deal is expected to close in 2023, subject to required regulatory approvals and clearances and other customary closing conditions.
Additional information regarding this transaction can be found at the L3Harris investor page and the Aerojet Rocketdyne investor page.
About L3Harris Technologies
L3Harris Technologies, an agile global aerospace and defense technology innovator, delivers end-to-end solutions meeting our customers’ mission-critical needs. The company provides advanced defense and commercial technologies across space, air, land, sea and cyber domains. L3Harris has more than $17bn in annual revenue and customers in more than 100 countries.
About Aerojet Rocketdyne
Aerojet Rocketdyne, a subsidiary of Aerojet Rocketdyne Holdings, Inc., is a world-recognized aerospace and defense leader that provides propulsion systems and energetics to the space, missile defense and strategic systems, and tactical systems areas, in support of domestic and international customers. For more information, visit www.Rocket.com and www.AerojetRocketdyne.com.
Regarding this Acquisition
Barclays Capital Inc. and Goldman Sachs & Co. LLC are serving as financial advisors, and Simpson Thacher & Bartlett LLP is serving as legal counsel to L3Harris. Citi and Evercore Inc. are serving as co-lead financial advisors, and Wachtell, Lipton, Rosen & Katz is serving as legal counsel to Aerojet Rocketdyne.
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.