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19 Jan 24. Kaman to be Acquired by Arcline for $1.8bn. Kaman Corp. (NYSE:KAMN) (“Kaman” or the “Company”) today announced that it has entered into a definitive agreement to be acquired by Arcline Investment Management, L.P. (“Arcline”), a growth-oriented private equity firm with deep experience investing in technology-driven, meaningful-to-the-world industrial businesses, in an all-cash transaction with a total enterprise value of approximately $1.8bn. Upon completion of the transaction, Kaman will become a privately held company.
Under the terms of the agreement, Kaman shareholders will receive $46.00 per share in cash. The per share purchase price represents a premium of approximately 105% over Kaman’s closing share price on January 18, 2024, the last full trading day prior to the transaction announcement, and a premium of approximately 110% over the volume weighted average price (VWAP) of Kaman common stock for the 90 days ending January 18, 2024.
“Following robust engagement with Arcline and careful evaluation of other potential value creation opportunities, we are pleased to have reached this agreement,” said Ian K. Walsh, Kaman Chairman, President and Chief Executive Officer. “Given the rigorous review of alternatives we recently completed, we are confident this transaction maximizes value for shareholders and is in the best interest of Kaman as well as our employees, customers and other stakeholders.”
Mr. Walsh continued, “Over the last several quarters, we have made significant progress executing our strategy by transforming our portfolio, through investing in innovation, pivoting to new growth technologies, and optimizing the Company’s cost structure. Arcline recognizes the strength of Kaman’s leadership and team, product portfolio and outstanding employees, and we look forward to benefitting from increased resources, expertise and flexibility as a private company post-closing. We thank Kaman’s many valued employees for helping us reach this important milestone in the Company’s history.”
Arcline said, “We have tremendous respect and admiration for Kaman’s team, history, and its portfolio of brands. Kaman has long been a trusted solutions provider of engineered components and subsystems to mission-critical markets, and we believe the Company is in a strong position to grow and benefit from attractive tailwinds. We look forward to working closely with Ian and the rest of the talented Kaman team to drive further growth through accelerated investments in both new product development and strategic acquisitions.”
Transaction Details
The transaction, which has been unanimously approved by the Kaman Board of Directors, is expected to close in the first half of 2024, subject to customary closing conditions, including approval by Kaman shareholders and receipt of required regulatory approvals. Following its unanimous approval of the transaction, the Kaman Board of Directors recommends that Kaman shareholders vote in favor of the transaction. The transaction is not subject to a financing condition. Arcline intends to fund the transaction with a combination of committed debt and equity financing. Upon completion of the transaction, Kaman will become a wholly owned subsidiary of investment funds managed by Arcline and Kaman’s common stock will no longer be listed on any public stock exchange.
Advisors
J.P. Morgan Securities LLC is serving as exclusive financial advisor to Kaman, and Skadden, Arps, Slate, Meagher & Flom LLP and Wiggin and Dana LLP are acting as legal counsel to Kaman.
Morgan Stanley & Co. LLC is serving as exclusive financial advisor to Arcline and Latham & Watkins LLP and Paul Hastings LLP are acting as legal counsel to Arcline.
About Kaman
Kaman Corporation, founded in 1945 by aviation pioneer Charles H. Kaman, and headquartered in Bloomfield, Connecticut, conducts business in the aerospace & defense, industrial and medical markets. Kaman produces and markets proprietary aircraft bearings and components; super precision, miniature ball bearings; proprietary spring energized seals, springs and contacts; wheels, brakes and related hydraulic components for helicopters, fixed-wing and UAV aircraft; complex metallic and composite aerostructures for commercial, military and general aviation fixed and rotary wing aircraft; safe and arming solutions for missile and bomb systems for the U.S. and allied militaries; subcontract helicopter work; restoration, modification and support of our SH-2G Super Seasprite maritime helicopters; support of our heavy lift K-MAX® manned helicopter; and development of the KARGO UAV unmanned aerial system, a purpose built autonomous medium lift logistics vehicle. More information is available at www.kaman.com.
About Arcline
Arcline Investment Management is a growth-oriented private equity firm with $8.9 billion in cumulative capital commitments. Arcline seeks to invest in technology driven, meaningful-to-the-world industrial businesses that enable a better future. For more information visit www.arcline.com. (Source: BUSINESS WIRE)
12 Jan 24. Defence Primes Increasingly Looking to Contract Problem Solving Specialists. Global defence prime contractors including BAE Systems, L3Harris, Babcock and Thales are using the JVAT risk assurance and engineering consultancy to provide advice and solutions in work areas that include solving complex problems.
Founded in 2017, JVAT has grown to over 100 employees and is built on the idea of inspiring confidence through trust, excellence and innovation using an agile and transparent approach to achieving desired project outcomes. Its services are appropriate across the defence, government, transport and infrastructure, energy and resources and Not-For-Profit markets.
JVAT claims to have successfully delivered over 250 engagements across Australia, United Kingdom and the United States. JVAT UK was incorporated in December 2021 and opened an office in Bristol in February 2022, with a turnover over $1.9 m. Its UK director, Henry Gardner, told Armada that it is on track to achieve its 60 percent growth target by 2024. Among its first clients were a large UK defence contractor and a global defence prime.
JVAT is a global small to medium-sized enterprise (SME) with an extensive network of talent and supply chain connections across the three countries mentioned, and as a global partner, it understands the regulatory, socio-political challenges and opportunities in each of the countries it operate in. It aims are to lead the way, identify and then remove barriers to entry for its clients. By leading, collaborating, and striving for excellence and innovation, JVAT claims to be able to solve its client’s most complex problems. Gardner said that it works in an “agile and collaborative way, driving efficiency and transparency in our ways of working to build the clients trust.” It develops enduring solutions based on its skills and knowledge of novel technology, engineering, assurance and business resilience. JVAT works with clients throughout the procurement lifecycle.
Pete Symonds, associate director UK, stated that JVAT’s role is to inspire confidence and achieve meaningful outcomes. “Working with companies our teams identify problems before they become problems. JVAT works with clients throughout the procurement lifecycle, during the bid phase to help clients prepare for success, during the delivery phase and during the in-service phase to evolve and adapt to change. At the project closure, the JVAT team will learn and improve for future delivery and demonstrate value for our client”.
JVAT is leading and delivering an Integrated Project Team (IPT) for a major defence prime, including their flagship programme as part of a 6th generation fighter development programme, and has delivered Preliminary Design Review (PDR) on time with exceptional feedback, according to the company. It has also provided executive leadership team support including: business strategy, objectives and frameworks.
JVAT and Gardner Aero Defence Solutions have successfully delivered a cutting-edge solution for a multi-role uncrewed aerial vehicle (UAV) to one of its UK Prime customers. In addition, it has also provided systems and safety engineering for development of the fuel and hydraulic systems of the UK AERALIS aircraft designers through collaboration with Filton Systems Engineering (FSE).
JVAT is positioning with global partners for AUKUS, the trilateral security partnership involving the United States and the United Kingdom to assist Australia in acquiring nuclear-powered submarines.
In the maritime sector, JVAT is providing systems engineering training for global primes in maritime including Babcock, BAE Systems and Thales.
(Source: Armada)
18 Jan 24. New Denel CEO expected in office next month. Come mid-February, the chief executive’s office at the Denel campus in Irene, Centurion, will have a permanent occupant for the first time in over three years. Tsepo Monaheng, currently chief executive of State-owned forestry company, SAFCOL, was selected as the most suitable candidate to head up the ailing defence and technology conglomerate. Minister Pravin Gordhan’s Public Enterprises Ministry said in December when naming Monaheng as Denel Group number one, the Denel chief executive search “attracted 67 responses”, with 14 meeting the necessary criteria. The last full-time Denel Group CEO was Danie du Toit, who resigned in August 2020 just short of two years in office. Subsequently, interim CEOs have included Talib Sadik, William Hlokoane and Michael Kgobe.
Monaheng is no stranger to defence technology, having previously been at the helm of Denel Dynamics, whose core business, as per the Denel Group website, includes tactical missiles, precision guided weapons, unmanned aerial vehicle systems and space solutions.
Of his appointment, Gordhan is reported as saying it “underscores our commitment as government to put Denel on a firm strategic path as we reposition the company to expand”.
Taking the “strategic path” concept further is Democratic Alliance (DA) shadow public enterprises minister Mimmy Gondwe. She has eight priorities which should all be given urgent and ongoing attention, starting with ensuring Denel annual and financial statements are brought up to date. “Denel has not submitted annual financial statements since the 2019/20 financial year,” she noted.
Gondwe elaborated on her priorities for the new man in charge to defenceWeb.
“Denel still has not stabilised financially despite being on the receiving end of a number of capital injections including the R3.4 bn allocation it recently received from National Treasury (NT) as well as the nearly R1 bn from the Denel Medical Benefit Trust (DMBT).”
Restructuring and re-positioning must be finalised and once implemented will see Denel move from six operating units to four, covering land, air, guided weapons and integrated systems.
Gondwe further wants the Denel turnaround plan implemented. “It is primarily aimed at securing the existing customer base but my concern is Denel requiring R2.2 bn to fully implement the plan.”
Identifying alternative and new revenue streams also has to be on Monaheng’s agenda. Here she sees local business as well as international export opportunities bolstering an order book that stood at R23.5 bn in 2016 and currently is “worth a mere R8.8 bn”.
Divesting itself of non-core assets “used by Rheinmetall Denel Munition (RDM) and Hensoldt” also has to happen as has re-establishing “a proper balance of skills in its staff complement”. This is important in view of “the large scale exodus of personnel” over a period of time. Denel, according to Gondwe, went from a personnel strength of 4 932 in 2016 to “just” 1 670 last year.
Her final priority for Monaheng will no doubt endear her to the powers that be at the SA Army.
Gondwe wants the new CEO to “restart Project Hoefyster [a replacement for the ageing Ratel infantry fighting vehicle] which has been on pause for the past five years” (Source: https://www.defenceweb.co.za/)
18 Jan 24. No need to re-invent the wheel for SA defence industry strategy – Heitman. The foundation for what the South African defence industry (SADI) should look like and be doing was laid over six years ago but, as with much else with the local defence sector, a lack of funding saw it stagnate.
This is how respected defence and military analyst Helmoed Heitman reacted to Pretoria-based consultant James Kerr’s call last week for an over-arching SADI strategy. Kerr specialises in the aerospace and defence sectors by way of entry strategies along with bid and proposal services.
He maintains the SADI should have three aims/goals. They are a secure and satisfying environment for companies and employees now as well as in the future, based on the SADI, the SA National Defence Force (SANDF) and employee passion with number two as providing satisfaction to the market now and in the future by way of best in world solutions with elements of country strategic independence and finally, making money now as well as in the future. His rationale to this is to understand aerospace and defence as an economic engine that can provide company as well as country benefits as far as employment, innovation and contribution to the tax base are concerned.
Heitman told defenceWeb he was responsible for a 2017 defence industry strategy, adding “sadly, it’s one of the documents Kerr complains about”. This he explains by stating his draft was a backgrounder “intended to include scene-setting for ministries that would have to buy in but knew nothing about defence or the defence industry”.
“At the time the intention was to have it approved and then turn its part four into the actual strategy document.” This didn’t happen as the entire document was circulated by the Ministry of Defence (MoD) as the strategy.
Notwithstanding, other work in the form of a first intervention plan was drafted by Heitman in 2018. This looked at – in his words – what was needed or could be done to save the actual defence companies plus a key sub-system provider.
“The second part, looking at other sub-system providers, was not drafted as funding ran out,” and that was that, with nothing further done about the strategy, the intervention plan and the aerospace and defence industry master plan.
Proposals put forward by Heitman included shipbuilding, helicopter development and manufacture of unmanned vehicles in the wider vision, including aerial, surface, sub-surface and ground.
“The master plan was one of six or seven ‘priority’ plans supposed to go directly to the President’s desk. Perhaps it did, but I haven’t seen any follow-up.”
Heitman made mention of the long-delayed SA Defence Industry Lekgotla, first announced in 2022 and apparently planned for mid-that year. The lekgotla is intended to examine challenges faced by the local defence industry, including reduced revenue, red tape, shrinking skills base, challenges at Denel, and reduced local defence spending.
Indications then were up to 200 participants would be part of the lekgotla. Included were the Defence and Military Veterans Minister and Deputy (Thandi Modise and Thabang Makwetla) and Public Enterprises Minister Pravin Gordhan, both Parliamentary defence oversight committees, policymakers, academics and industry representatives. It remains unclear when the lekgotla will be held. (Source: https://www.defenceweb.co.za/)
17 Jan 24. Kopin Corporation Unveils New Era of Innovation and Leadership Following NASDAQ Closing Bell Ceremony. Kopin Corporation (NASDAQ: KOPN), a leading provider of application-specific optical solutions and high performance micro-displays for defense, enterprise, consumer and medical products kicked-off its new corporate direction and branding campaign with a NASDAQ closing bell ceremony in Times Square on January 16, 2024.
Kopin’s new branding is in concert with a strategic evolution in its corporate direction under the leadership of Kopin’s CEO, Michael Murray. The company is transitioning from being the leading provider of microdisplay solutions to becoming an application-specific optical solutions provider. This shift underscores Kopin’s dedication to pioneering visionary solutions that optimize human performance in precision applications when it matters the most. The move reflects a strategic commitment to aligning Kopin’s capabilities with evolving technical advancements and market needs through the development of innovative solutions that are inherently human-centric, prioritizing user experience, ergonomics, and application specificity for professionals such as surgeons, pilots, gamers and more.
Commenting on the new corporate direction and branding efforts, Michael Murray, CEO and President, Kopin Corporation said, “Kopin has a rich 40-year history of innovation in technologies ranging from solar cells to microdisplays to wearable optical systems and beyond. As we look forward, our foundational innovation paired with our core capabilities serve as the bedrock for our progression into application-specific optical solutions and advanced software-defined AI-enabled microdisplays.”
Merging AI and Microdisplay Tech for Seamless Adaptation to Users
Inaugurating the new corporate direction, Kopin introduced its groundbreaking NeuralDisplay™ architecture — a paradigm shift in technology adaptation for AR/VR users and their environments. Developed in collaboration with MIT’s Computer Science & Artificial Intelligence Laboratory, the NeuralDisplay design is intended to seamlessly integrate eye-tracking with machine learning to dynamically adjust micro-OLED displays. This AI-powered technology provides a personalized experience, compensating for users’ unique vision characteristics such as eye dominance, pupillary distance, and direction of focus in real-time. Unlike traditional methods, NeuralDisplay’s automated, display-level adjustments are designed to happen instantaneously and eliminate the need for manual user interventions, enhancing the accessibility and user-friendliness of AR/VR headsets.
Brand Evolution for Seamless Human-Technology Integration
Central to Kopin’s brand evolution is the unveiling of a new logo, a design that not only refreshes its identity but also exudes a stronger and more impactful presence. The circular symbol at the heart of the new logo serves as a visual representation of the company’s commitment to both “focus on the user” and the expansive range of our technological innovations. Complementing the visual identity, is a new tagline, “Vision Beyond Imagination,” which succinctly captures the ethos driving the company forward—an unwavering commitment to pushing the boundaries of what is conceivable and delivering solutions that transcend expectations. As part of the rebranding, Kopin has also introduced a dynamic new website that mirrors its refreshed visual identity. This user-centric platform invites visitors to explore the company’s cutting-edge solutions. The new logo, tagline, and website are not just cosmetic changes; they represent a dynamic shift that reflects the brand’s evolving vision for the future. (Source: BUSINESS WIRE)
17 Jan 24. Leonid Capital Partners Invests in Infinite Composites to Fund Innovative Materials Science Solutions for National Security and Space Challenges. Leonid Capital Partners, a leading provider of alternative financing solutions for government contractors, announced today a strategic partnership with Infinite Composites, a revolutionary innovator in advanced materials shaping the future of both government and commercial space missions and the global energy transition. This unique financing agreement, tailored to Infinite Composites’ Army Phase 2 SBIR contract, fuels their rapid development of next-generation pressure vessels for aerospace and transportation.
Infinite Composites is a pioneer in composite pressure vessel design. Their groundbreaking, lightweight, composite materials significantly reduce gas storage costs, enhance performance through mass reductions, and extend mission lifespans. This not only strengthens National Security capabilities but also paves the way for a more vibrant and accessible commercial space and hydrogen transportation market.
By securing Leonid’s strategic financing, Infinite Composites gains the financial agility needed to expedite their path to market. Leonid’s unique loan structure leverages Infinite Composites’ Army SBIR contract, providing immediate access to capital for internal growth investments. This innovative approach reflects Leonid’s commitment to fostering advancements in critical sectors like materials science at the intersection of National Security and Space.
“Leonid’s understanding of our industry and the need for flexible financing solutions perfectly align with our growth trajectory,” said Matt Villarreal, CEO of Infinite Composites. “Their partnership allows us to focus on delivering these game-changing materials to market, knowing our financial needs are met.”
“Infinite Composites is not just pushing the boundaries of materials science, they are propelling America forward in the new space and new energy era,” said Chris Lay, Founding Partner at Leonid Capital Partners. “This partnership exemplifies Leonid’s dedication to empowering ventures that reshape the future of space and transportation, both for national security and commercial exploration.”
About Leonid Capital Partners
Leonid Capital Partners is a private investment firm providing alternative financing solutions for US Government Contractors. Leonid offers flexible and innovative financing options, enabling companies to achieve their full potential. For more information, please visit https://leonidfinance.io.
About Infinite Composites
Infinite Composites revolutionizes space exploration and sustainable transportation with their groundbreaking, ultra-lightweight composite pressure vessels. Their advanced technology overcomes weight limitations and capacity challenges, resulting in reduced transportation costs, extended vehicle ranges, and unprecedented advancements in both government and commercial space missions and transportation initiatives. For more details, please visit https://www.infinitecomposites.com/. (Source: BUSINESS WIRE)
17 Jan 24. Survitec expands US presence with Vinyl Technology purchase. The move sees the UK-headquartered survival systems provider increase key capabilities in the fast-jet market, as global aerospace and defence sector records improved sentiment.
UK-headquartered survival technology solutions provider Survitec has acquired US-based Vinyl Technology, which specializes in custom-made plastic and industrial fabric products for military and other high-end markets.
According to a 15 January 2024, release from Survitec, the acquisition will see the company increase its US presence and expand its capacity for Pilot Flight Equipment (PFE) production. Terms of the deal were not disclosed.
Survitec’s acquisition propels the company to become the foremost employer of highly skilled sewing capacity necessary for Pilot Flight Equipment (PFE) production. Vinyl Technology produces a range of PFE equipment, including the Advanced Technology Anti-G Suit for use in the military fast-jet sector.
Other systems produced by Vinyl Technology include anti-G Suits, fuel bladders, cargo bags, and CBRN suits.
Survitec is the exclusive supplier, designer, qualifier, and manufacturer of the full below-the-neck PFE for the Joint Strike Fighter programme, which is produces thousands of F-35 fighters to US and international customers.
The announcement comes following a slight upturn in sentiment from the global aerospace, defence, and security sector, which experienced a 1% rise in company filings sentiment in Q4 2023 compared with the previous quarter, according to GlobalData’s analysis of over 148 aerospace, defence, and security company filings. (Source: army-technology.com)
16 Jan 24. Honeywell’s quantum computing firm valued at $5bn after latest fundraise. Honeywell International (HON.O), opens new tab said on Tuesday its quantum computing company, Quantinuum, was valued at $5bn after a $300m equity funding round, anchored by JPMorgan Chase (JPM.N), opens new tab.
Mitsui & Co (8031.T), opens new tab and Amgen (AMGN.O), opens new tab also participated in the latest round, which took the total capital raised by Quantinuum since inception to about $625m.
Companies are exploring ways to develop and scale quantum capabilities to solve complex problems such as designing and manufacturing hydrogen cell batteries for transportation.
Quantinuum’s technologies are used by companies such as Airbus (AIR.PA), opens new tab, BMW Group (BMWG.DE), opens new tab, Honeywell, HSBC (HSBA.L), opens new tab and JPMorgan Chase.
“Financial services has been identified as one of the first industries that will benefit from quantum technologies,” said Lori Beer, global chief information officer at JPMorgan Chase.
Honeywell, which remains Quantinuum’s majority shareholder, said the funds will be used for developing fault-tolerant quantum computers, while also extending the quantum computing company’s software offering.
(Source: Reuters)
16 Jan 24. Synopsys to buy engineering software firm Ansys in $35bn deal. Chip design software maker Synopsys (SNPS.O), opens new tab said on Tuesday it would buy Ansys (ANSS.O), opens new tab in a $35bn cash-and-stock deal, snapping up the maker of software used in creating products from airplanes to tennis rackets of players like Novak Djokovic.
The transaction would be the biggest acquisition in the technology sector since chipmaker Broadcom (AVGO.O), opens new tab took over software maker VMware last November in a $69bn deal.
It could herald more big deals as a pickup in economic sentiment and some failed attempts by antitrust regulators to thwart deals embolden chief executives to place large acquisition bets.
The deal implies a per-share value of $390.19 and represents a premium of about 29% over Ansys’ last close on Dec. 21, 2023, the companies said.
The transaction will create a massive new player in a sector of the business software industry that is already highly consolidated, which Wells Fargo said in a note creates regulatory uncertainty. After the news, Synopsys shares were up 3.8% to $513, but Ansys shares were down 4.8% to $329.86.
The tie-up comes at a time when leading companies like Nvidia (NVDA.O), opens new tab and Intel (INTC.O), are designing much more complex chips that are made of many pieces, as well as designing the massive computing systems that house the chips. Synopsys makes tools to design the chips themselves, a complement to offerings from Anysys, which makes software for evaluating larger electronic systems where those chips end up. (Source: Google/Reuters)
16 Jan 24. Booz Allen Invests In Second Front Systems to Speed USG Innovation. Booz Allen Hamilton (NYSE: BAH) today announced that its corporate venture capital arm, Booz Allen Ventures, LLC, has made a strategic investment in Second Front Systems™ (2F), a public-benefit corporation accelerating the delivery of mission-critical solutions in the U.S., Europe, Australia, and for NATO.
This investment supports and further powers 2F’s Game Warden DevSecOps Platform, a first-of-its-kind tool that configures, secures, and deploys Impact Level (IL) 1-7 accreditations for companies to deliver software to U.S. government (USG) customers, including the Department of Defense (DOD), enabling a compliant and fully managed production environment. Delivering commercial software as a service (SaaS) and authority to operate (ATO) to government with built-in accreditation, 2F’s Game Warden enables non-traditional vendors and technology providers to innovate at the speed of need to meet Day One mission demands in today’s heightened geopolitical environment.
“The U.S. government spends more than $100bn annually on information technology to modernize federal cloud infrastructure and deliver mission solutions,” said Julie McPherson, executive vice president at Booz Allen and leader of the firm’s Digital Solutions business. “Accreditation of new software applications typically takes two years and approximately $1.5 to $2m to obtain an authority to operate. 2F streamlines this process, accelerating the adoption of commercial off-the-shelf solutions for DOD, U.S. government, and key allies in today’s fast-paced environment.”
The investment by Booz Allen Ventures is aligned with the firm’s VoLT business strategy, focused on velocity, leadership, and technology—and supports Booz Allen’s Chief Technology Office and Digital Battlespace Platform missions. “The Game Warden Platform not only accelerates software delivery across our portfolio, but it unlocks an entire ecosystem of promising software products and capabilities that have been out of reach of operational programs and users,” said Booz Allen Executive Vice President Steve Escaravage, executive vice president at Booz Allen and leader of the firm’s Digital Battlespace Platform.
“This is the future of software accreditation to speed innovation for critical missions and U.S. advantage,” added Brian MacCarthy, senior vice president at Booz Allen and managing partner for Booz Allen Ventures. “We invested in 2F not only because of anticipated mission impact, but also mission understanding: Their accreditation solution reduces barriers to entry in a safe, standardized, and scalable way for non-traditional vendors developing real, novel, and needed solutions.”
2F’s leadership team is comprised of veterans with deep military and tech experience—aligned with Booz Allen’s efforts to develop client solutions at the heart of mission understanding and technology expertise.
“As we work to change the relationship between commercial software and national security, collaborating with Booz Allen was the obvious choice,” said Tyler Sweatt, CEO at 2F. “Combining the Game Warden platform with their broad customer and program expertise and insight will allow us to rapidly scale the impact of commercial software in national security and we couldn’t be more stoked.”
Additional investors in 2F this funding round include NEA and Moore Strategic Ventures, LLC.
Since launching in 2022, Booz Allen’s $100m corporate venture capital arm has made seven strategic investments in early-stage companies and dual-use commercial technologies with focus on four core areas: defense, artificial intelligence/machine learning, cybersecurity, and emerging/deep technology. Previous Booz Allen Ventures investments include Latent AI, Synthetaic, Reveal Technology, Credo AI, Hidden Level, Shift5, and Hidden Layer. (Source: BUSINESS WIRE)
16 Jan 24. RTC Aerospace Acquires Vanderhorst Brothers Industries. RTC Aerospace LLC (“RTC”), a leading manufacturer of high-precision, difficult-to-machine components for commercial and military aircraft and varied aerospace and defense applications, announced today that it has acquired Vanderhorst Brothers Industries (“VBI”). This is RTC’s second acquisition under Stellex Capital Management (“Stellex”), a private equity firm that invests in middle market companies in North America and Europe. The financial terms of the transaction were not disclosed.
Based in Simi Valley, CA, and founded in 1973, VBI has been led by Brian, Juno and son Bob O’Rell for over 20 years, becoming a preeminent manufacturer of precision components to the aerospace, defense, and space industries. The combination will enable RTC and VBI to expand their product portfolios and capabilities to provide innovative solutions that will further service the growing needs of their customers.
Brian O’Rell will continue his role as President of VBI. “We are deeply impressed with the RTC team and are excited for the combined future of the two firms,” said Brian O’Rell. “We look forward to working closely with each other to provide quality parts and service to our customers.”
Frank Giron, CEO of RTC added, “As we welcome VBI into the RTC family, we are not only expanding our capabilities and complementing our customer base, but we are also reinforcing our presence in Southern California as the supplier of choice for our customers with our dedication to delivering unparalleled products and services. Together, we believe we are poised to capitalize on new opportunities, drive synergies, and create significant value for our stakeholders, customers and employees.”
For over 65 years, RTC has been providing blue-chip commercial and military aerospace OEMs and Tier 1 suppliers with specialized manufacturing solutions. Since being acquired in February 2022 by Stellex, RTC has been on an aggressive growth trajectory in an effort to become an even more valuable manufacturing partner to its customers.
David Waxman, Managing Director at Stellex said, “We believe RTC and VBI are critical partners to their customers, and together will provide top-tier quality and service. We are excited to have provided our support to the RTC team during the acquisition and look forward to additional opportunities for strategic acquisitions in the coming years.”
About RTC
RTC is a manufacturer of complex machined components and high-precision parts for military and commercial aircraft, serving a variety of Tier 1 and OEM customers on key platforms with operations in Chatsworth, California, and Fife, Washington. Additional information may be found at https://www.rtcaerospace.com/
About VBI
VBI is a family-run manufacturer of complex machined components and high-precision parts for leading Tier 1 and OEM customers across the aerospace, defense, and fast-growing space industries nestled in the heart of Simi Valley, California. Additional information may be found at http://w.vbinc.com/index.shtml
About Stellex Capital Management LLC
With offices in New York, Detroit, Pittsburgh, and London, Stellex Capital is a private equity firm with over $2.6bn in AUM. Stellex seeks to identify and deploy capital in opportunities that stand to benefit from its operationally focused and hands-on approach to investing. Portfolio companies are supported by Stellex’s industry knowledge, operating capabilities, network of senior executives, strategic insight, and access to capital. Sectors of particular focus include aerospace, defense & government services, transportation & logistics, manufacturing, real economy & business services, food processing and tech-enabled services. Additional information may be found at www.stellexcapital.com. (Source: BUSINESS WIRE)
16 Jan 24. Qinetiq to spend £100m on buybacks. Buying back 30m shares would boost EPS by 5 per cent, analyst says.
- Revenue from the Avantus lower than expected
- Rating below the five-year average
The big news from Qinetiq’s (QQ.) third-quarter trading update was not so much its trading performance but its announcement of a £100m share buyback.
Although the defence technology company’s shares were among the early gainers following Russia’s invasion of Ukraine, momentum has since sagged. Even after recording a 7 per cent bounce on the buyback news, Qinetiq’s share price is flat over the past 12 months, while peers have gained by an average of 36 per cent, according to Berenberg.
Part of the problem has been lacklustre interim results, with the company blaming US federal budget disagreements and legal challenges by losing bidders that prevented new awards from being made. Although it has since won a $170m (£135m) order from the US Department of Homeland Security to provide a radar system, these delays have continued, and revenue from the Avantus business bought for $590m last year will be “around the lower end of our second half expectations”, the company said.
Thankfully, this has been offset by decent growth in its EMEA Services business, meaning that group-wide performance should be in line with consensus forecasts.
These include a cash conversion ratio of over 90 per cent for the year, and with the company unable to find any suitable acquisition targets, it plans to hand the money back to shareholders. Shore Capital analyst Jamie Murray said that, at the current price, a £100m buyback would reduce the defence contractor’s share count by around 30m, which should mean an earnings per share uplift of 5 per cent. Qinetiq’s shares now trade at just 10.8 times forecast earnings, well below their five-year average of 14 times and the benchmark for peers of over 19 times. Last IC View: Buy, 323p, 16 Nov 2023. (Source: Investors Chronicle)
16 Jan 24. EDGE Group plans to expand Brazilian defence jobs and capacity. The Brazilian smart weapons company, SIATT, of which EDGE is a 50% stakeholder, plans to expand capacity sevenfold and increase defence-related jobs.
The Brazilian smart weapons manufacturer SIATT – a recent addition to the Emirati defence conglomerate EDGE Group, which purchased a 50% stake in the Sao Paulo company in September 2023 – has announced plans to considerably expand the company’s capacity and personnel.
According to a press release from 16 January 2024, the Group’s support will help SIATT to expand its headquarters and manufacturing base in the city of São José dos campus sevenfold, from 1,000 square metres to 7,000.
In addition, the business will also hire from the local talent pool, which will see significant job growth, with the number of direct employees reaching 200, and indirectly generate more than 600 further positions.
Before the acquisition of SIATT, EDGE Group signed a co-development agreement with the Brazilian Navy for advanced long-range anti-ship missile technology, as part of the MANSUP national anti-ship missile project, for which SIATT is providing the guidance, navigation, control and telemetry systems. The newly increased capacity will allow for additional laboratory space as well as administrative buildings.
EDGE Group FDI to help rebound Brazilian jobs
Since EDGE Group tapped into the Brazilian defence market throughout 2023, the country’s job market saw considerable growth.
“Growth in the domestic defence market continues to benefit the Brazilian economy as the government seeks to offset a spike in unemployment during the Covid-19 pandemic,” GlobalData Defence Analyst, Tristan Sauer observed. “As the Brazilian military undergoes a force-wide modernisation efforts, FDI from emerging defence players such as EDGE Group will facilitate the evolution of the Brazilian defence sector into a critical regional player.”
However, since the tail-end of 2023, Brazil’s active jobs saw a steady decline, as can be observed from the graph below.
However, it appears EDGE’s support for SIATT may serve to counteract this reduction, especially within the local economy of the state of São Paulo, located on the nation’s eastern coast, just south of Rio de Janeiro.
Furthermore, other foreign investors in Brazil’s defence market have reached certain milestones too. The French naval manufacturer, Naval Group, has also supported Brazil’s naval industry – from resources for its first indigenously-built submarine to naval nuclear power engineering. New job listings for new defence sectors such as these will rebound Brazil’s job decline. (Source: army-technology.com)
15 Jan 24. Volvo Group has signed an option agreement with John Cockerill Defense which gives the Volvo Group the right to sell Arquus after mandatory consultations with staff representative bodies. The consultations are expected to be finalized in Q1 2024. As a result of the option agreement, the Volvo Group’s operating income will be negatively impacted by approximately SEK 900m in the fourth quarter of 2023.
Arquus manufactures and sells specially designed vehicles to defense forces and employs about 1,200 employees in France. In 2022, Arquus represented approximately 1 % of Volvo Group revenues.
The negative earnings effect will be reported in the segment Group Functions & Other and will be excluded from adjusted operating income.
If the option is exercised, closing of the divestment will be subject to governmental approvals and other conditions.
Defense News reported that John Cockerill expects defense revenue of €1bn (U.S. $1.1bn) by 2026 from the combination of its defense division with Arquus, it said in a statement, adding that the acquisition will boost the company’s footprint in the global land defense market.
The deal would more than double John Cockerill’s defense business, combining its turrets and firing systems with the supplier of 90% of the French army’s wheeled vehicles. Arquus already offers a fire-support version of its VAB Mk3 armored personnel carrier with a 90mm turret from John Cockerill.
“The combined offer of light tank turrets and vehicles from John Cockerill Defense and Arquus will generate important synergies that will result in more innovative and more competitive vehicles to equip land forces around the world,” John Cockerill chief executive Francois Michel said in the statement.
Michel said the planned acquisition will be “transformative” for the European defense industry in the area of light tanks. The acquisition will allow John Cockerill to offer “the best level of quality and cost competitiveness” for both light tank turrets and military vehicles, the company said.
Volvo Group said it signed an option agreement with John Cockerill Defense that gives the company the right to sell Arquus after mandatory consultations with staff representatives, which are expected to be finalized by the end of March. Closing of the deal would be subject to government approvals, the Swedish company said.
John Cockerill Defense and Arquus target a staff of 2,000 people by 2026, with major operational centers in Belgium, France, India and Saudi Arabia. The combination would be a major step to industrially supporting the coordinated vehicle sourcing programs of the French and Belgian land forces, John Cockerill said.
The Belgian company in January 2023 merged its French defense business with its Agueris training-simulator unit, part of a bid to strengthen its commitment to France’s defense industrial and technological base.
John Cockerill reported 2022 sales of €1.05bn, including a declining contribution from its defense business, which posted revenue of around €240m in 2021. Arquus posted 2022 revenue of €559m and operating profit of €21.5m, according to company filings. Volvo Group said it will take a charge of 700m Swedish kronor (U.S. $87m) for the sale of Arquus against 2023 fourth-quarter operating income. (Source: Defense News)
16 Jan 24. QinetiQ Group plc (“QinetiQ” or the “Group”) today issues a trading update covering its third quarter and announces its intention to commence a share buyback programme to return up to £100m to shareholders over 12 months.
On-track to deliver full year expectations
The Group has delivered good operational performance in the third quarter, with continued organic revenue growth and operating profit margin in line with our expectations. Order intake has continued to remain strong, with year-to-date orders at circa £1.35bn and revenue under contract for the full year improving to 95%, higher than this time last year. As expected, cash generation has been very strong with cash conversion significantly above 100% in the quarter. We are now back in-line with our normal cash profile and on-track to deliver 90%+ cash conversion for the full year, as previously guided. Overall, the Group is making good progress and we remain on-track to deliver in line with expectations for FY24[1].
EMEA Services has continued to perform particularly well with strong revenue growth offsetting modestly lower Global Solutions revenue, due to longer than expected continuation of US market uncertainty and budget delays. Reflecting this Avantus revenue growth will be around the lower end of our second half expectations, however the business continues to win significant new business strategically aligned to national defence and security priorities, pleasingly ahead of our plan, with $872m[2] of new contract awards so far this year. Strong orders momentum and good programme execution, demonstrated by the successful transition of the Tethered Aerostat Radar System (TARS) under our operational control ahead of schedule in December, underpins our continued confidence in Avantus delivering our medium and long-term growth expectations.
Capital allocation and launch of £100m share buyback programme
Our strategy to deliver long-term sustainable growth is unchanged and underpinned by our disciplined capital allocation policy. As explained at our Investor Seminar in October 2023, we continuously evaluate the deployment of our capital to maximise value through organic and inorganic investments and to deliver healthy returns for our shareholders, whilst maintaining a prudent balance sheet.
During the third quarter we have continued to manage our pipeline of inorganic opportunities, but at this present time no potential acquisitions meet our rigorous strategy-led and financial criteria. Given the strength of the Group’s balance sheet, the highly cash generative nature of the business and the Board’s view of the current undervaluation of the Group, we have concluded that now represents a compelling time to return excess capital to shareholders. We are therefore pleased to announce the launch of a £100m share buyback programme in February 2024, subject to shareholder approval, that we expect to complete over the next 12 months.
The proposed share buyback programme represents an attractive use of our capital to drive shareholder value, whilst maintaining leverage less than 1.5x (net debt/EBITDA) and maintaining the financial flexibility to invest in the ongoing execution of our strategy to deliver sustainable growth and attractive returns.
Steve Wadey, Group Chief Executive Officer said: “QinetiQ has a critical role in ensuring our customers across our home countries of the UK, US and Australia have the defence and security capabilities they need. Our excellent order intake demonstrates the continuing demand for our high-value, cutting-edge services and products. Our operational performance in the third quarter underlines our confidence in delivering another year of good organic growth at stable margins with strong cash conversion.
“Given the Group’s high cash generation and confidence in the long-term outlook, we are pleased to announce the launch of a £100m share buyback programme to increase returns to shareholders, whilst maintaining the ability to deliver our long-term growth strategy.”
Inside Information
The information relating to the proposed share buyback programme in this announcement constitutes inside information as stipulated under the Market Abuse Regulation (EU) No.596/2014 (as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018). On the publication of this announcement via a Regulatory Information Service, such information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of QinetiQ is James Field, Company Secretary.
15 Jan 24. Airbus Helicopters and Aerovel have signed an agreement regarding the acquisition of Aerovel and its unmanned aerial system (UAS), Flexrotor, as part of a strategy to strengthen its portfolio of tactical unmanned solutions. Flexrotor is a small tactical unmanned aerial system designed for intelligence, surveillance, target acquisition and reconnaissance (ISTAR) missions at sea and over land.
“We are looking forward to welcoming Aerovel into the Airbus family. This strategic acquisition aligns with our vision to expand our UAS offering and respond to a growing customer demand worldwide for additional mission capabilities such as manned-unmanned teaming. Aerovel’s expertise in autonomous flight technology will undoubtedly complement our UAS development with the VSR700, as well as the work that we have been doing to develop interoperability,” said Bruno Even, CEO of Airbus Helicopters.
“Joining forces with Airbus will allow us to scale innovation, accelerate our mission to advance unmanned aviation, and maintain our unwavering support for the US military and its allies. We are proud to become part of an organisation with a rich legacy of aerospace excellence and we look forward to leveraging our combined strengths to define the future of autonomous systems. It will also be a great tribute to our Founder and Chief Technology Officer, Tad McGeer, who has spent the last 30 years committed to delivering innovative unmanned products,” said Ali Dian, CEO of Aerovel.
The Flexrotor, a modern Vertical Takeoff and Landing (VTOL) Unmanned Aircraft with a maximum launch weight of 25 kg, has been designed for ISTAR missions for more than 12-14 hours in a typical operational configuration. It can integrate different types of payloads including an electro-optical system and advanced sensors to suit customers’ unique mission needs. With the ability to autonomously launch and recover from either land or sea requiring only a 12 by 12 ft. area for launch and recovery, the Flexrotor is ideal for expeditionary missions requiring minimal footprint. Through the support of the US Department of Defense (DoD), and contracted deployment in a variety of maritime security exercises, the Flexrotor is a mission-proven, force multiplier for operations in harsh, high-threat, GPS-denied environments. The Flexrotor can also be used for parapublic missions such as forest fire surveillance (providing firefighters with critical images day or night) and ice navigation (helping guide naval vessels through ice in the Arctic ocean).
Aerovel, based in Bingen, Washington, will remain a US-owned company and continue collaboration with the US DoD under Airbus’ Special Security Agreement (SSA).
The acquisition has been approved by the relevant bodies of both companies. It remains subject to regulatory approvals, as well as other customary conditions. Transaction closing is expected in 2024.
15 Jan 24. Galvion invests in Quaze Technologies to further enable wireless charging as a global defence capability. Galvion, a world leader in the design and manufacture of intelligent power and data management systems and tactical head solutions, has announced the establishment of a strategic investment partnership with Quaze Technologies. Quaze Technologies, a Canada-based innovative technology company provides wireless power solutions that enhance the performance and functionality of unmanned systems. This newly announced strategic partnership combines the relative strengths of the technological innovation of both companies in providing future integration of wireless and autonomous charging capabilities to the dismounted warfighter.
A commitment to providing leading-edge power and data solutions and protective equipment that enhance the overall agility and survivability of the warfighter was central to Galvion’s decision to invest in Quaze. The development and rapid-fielding of advanced concepts and integrated systems is critical to meeting the challenges of tomorrow’s battlefield, and drives Galvion’s forward-thinking growth strategy.
The Quaze wireless charging technology has applicability across a wide spectrum of land, air and sea domains, with intelligent solutions that can provide opportunities for the warfighter to quickly and easily charge systems before, during and after missions.
As well as receiving investment, Quaze Technologies has appointed Galvion’s Founder and Executive Chairman, Jonathan Blanshay, to their board of directors. Said Blanshay: “We have spent the past 22 years driving innovations in soldier systems in order to provide integrated solutions that can adapt to the ever-changing operational needs of the modern warfighter. We understand the challenges faced, and the speed with which things are changing, and we have identified some really interesting opportunities in the groundbreaking wireless charging technologies being developed by Quaze.” Blanshay added: “Lessening the burden on the individual operator and unit, whether physical, cognitive, or logistic, drives everything that we do at Galvion, and we are excited to be collaborating with Quaze’s innovative team to deliver industry advancements that will give battlefield edge to our military and tactical teams.”
Xavier Bidaut, CEO at Quaze Technologies said: “This strategic partnership is an exciting milestone for Quaze. We are focused on providing innovative wireless power solutions that liberate unmanned systems from traditional power constraints, enabling seamless operations across diverse sectors. Galvion is a market-leading soldier systems company with an outstanding track record of delivering innovative technologies into defence and security sectors, worldwide. There is unlimited potential for synergy and development here, and Jonathan’s considerable industry expertise is a welcome addition to our board, and a clear demonstration of his commitment to supporting and promoting pioneering technologies that serve the industry.”
15 Jan 24. Record Number of Deals for Space Sector in Q4. Global Investment within the Space sector has equalled 2022 despite challenging market conditions throughout last year, new research can reveal.
While the general VC investment saw a 35 per cent drop in investment between 2022 and 2023, SpaceTech substantially outperformed. Despite a slow start to 2023, the year culminated with a total annual investment of $6.9bn, in line with 2022.
The final quarter of the year was the most active, with $2.2bn invested across 128 deals, up from $1.6bn in the third quarter, marking the highest number of recorded deals in a single quarter since reporting first began. These transactions signify an all-time high in activity for both late-stage investing, with the resurgence of growth rounds, and early-stage, indicating a substantial pipeline of new opportunities within the NewSpace economy.
All of the largest rounds for the quarter were concentrated in capital-intensive businesses, which own or operate assets in space. Businesses with capital-light models have, in many cases, strategically avoided seeking growth capital on less favourable terms, while capital-intensive ventures are returning to the capital markets since they more immediately require funding to achieve scale. Firefly Aerospace raised the largest round for the quarter, at $300m. The round demonstrated that strong businesses raising from a position of strength continue to succeed in raising large investment rounds.
Series C deals have tripled in the last year, showing the highest increase by stage, with a record $1.7bn invested. It is expected that several businesses will return to the market after holding off on fundraisers in the past two years. Overall, there was an increase in the number of deals across every stage except Series A, which remained the same as in 2022. The Seed stage continues to show strong and continuous year-over-year growth, which is a very positive sign when compared to significantly reduced fundraising in general VC. It is promising to see early-stage SpaceTech businesses continue to emerge and secure funding despite high-interest rates and a general VC pullback.
A significant driver of this global success is the recent influx of investments from significant Japanese investors such as Mitsui, Mitsubishi, and Toyota, which have injected capital into major growth rounds for startups such as Firefly, Astroscale, and Stoke Space. This signals a strong confidence in the sector’s future, with these strategic investments by Japanese firms reflecting a growing global interest in space tech across the Asian market. Although the US remains the preferred choice for investment, regions like Asia are showing steady and robust growth in maintaining second place. Around 40 per cent of the investment was primarily focused on early-stage companies with smaller funding rounds. In the later stage, the largest funding round in Asia was $154m. Data also highlights that the “Beyond Earth” sector – focused on developing infrastructure for space such as lunar landers or space stations – has seen dramatic growth as both Government funding and global investors begin to focus on solutions and technologies to develop their space capabilities. The efforts of rival nations to establish a position of dominance in space will also see geopolitical tensions extending into orbit, creating a new domain of “space politics”. Another standout sector for investment was “Collect“, attracting $1.8bn of investment with SpaceX as the major contributor. This year was a record-breaking year for SpaceTech M&A with 30 transactions completed versus 22 last year. This year saw several strategic moves made by larger players in private equity, such as Advent’s acquisition of Maxar and KKR’s take private of satellite manufacturer OHB. BAE acquiring Ball Aerospace was a major acquisition, which saw further consolidation across the industry.
Maureen Haverty, Principal Investor for Seraphim Space, said: “Despite an increasingly challenging economic period, investment into the space tech sector across has continued to show great robustness and strong signs of recovery in the last year. While the venture capital market has struggled globally, Space tech is bucking trends with sustained levels of high investment. What’s even more promising is the growing number of institutional and private equity funds now contributing to growth-stage investment activity and participating in larger rounds. The renewed investment focus from Governments around the world, a burgeoning private equity market and a surge in M&A activity means 2024 is on track for a strong year of investment.”
UK Analysis:
- While global investment remained flat compared to 2022, investment fell significantly in the UK. Investment dropped by 24% from $268.5m to $204.7m, and the number of deals decreased by 30%.
- In 2023, the UK ranked fifth globally in terms of investment, securing a strong second place in Europe with total investment of $204m, just behind Germany’s $291m.
- With 26 deals in 2023, the UK ranked third globally, trailing only behind the US and China. This achievement positions the UK as the leader in deal numbers within Europe, a testament to the region’s vibrant startup ecosystem and investor interest.
- However, the UK’s global rank of 18th in average round size points to a trend of smaller, early-stage rounds. This is further evidenced by the fact that out of the 26 UK deals in 2023, only three were late-stage. The UK space scene is thus characterised by a vibrant early-stage ecosystem but fewer large-scale growth deals.
- Notable deals include Open Cosmos’ $50m Series B, Reaction Engines’ $48m Series D+, and Resilience’s $26m Series B demonstrate the potential and diversity of the UK space sector.
10 Jan 24. Oxford Space Systems’ funding round. The company has secured partner and grant funding which, together with this growth capital equity round, will enable execution of development plans for these opportunities..
Specific projects identified by the company include variants of the successful Wrapped Rib Synthetic Aperture Radar antenna architecture, a Hinged Rib high frequency antenna for intersatellite communications and a terrestrial antenna for rapid deployment/high performance connectivity. These products all have a range of both commercial and defence and security applications to enable high performance, cost effective capabilities from space across earth observation, telecoms and security applications.
Potential applications of the Hinged Rib antenna include data relay from EO satellites in LEO to high capacity GEO satellites and subsequent down link to secure ground stations. The terrestrial antenna will be ultra lightweight to better support dismounted soldiers or other users, such as disaster recovery and aid workers, that need fast access to high capacity communications networks.
Sean Sutcliffe, Chief Executive of Oxford Space Systems, comments on the round, “This growth round will enable us to develop high-potential products and expand our market reach beyond that previously envisaged. We are pleased that UKI2S has been able to provide significant support for this growth funding, alongside our other investors, and recognize that these outstanding products can help the UK and its allies and partners address their future requirements in an innovative and cost effective way. This is also enabling us to build on our deployable antenna product development and manufacturing capabilities at our Harwell and Abingdon facilities, showcasing a commitment to UK technology advancement and innovation. Oxford Space Systems is set to play a vital role in the space industry, increasingly crucial for the economy and national security.”
(Source: Satnews)
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