Return to search

Aerospace & Defense Deals Draw PE Crowd

Companies that make rockets, airplanes and machine guns continue to be a draw for private equity firms.

So far this year there have been 31 announced M&A deals in the U.S. aerospace and defense sector, worth about $2.4 billion. Through August 19, 2009, there were the same number of deals, 31, but the transactions were valued roughly $1.9 billion, according to data from Thomson Reuters.

Of the 31 aerospace and defense mergers this year, seven have involved private equity firms and totaled $485 million. In the year-ago time period, only five deals involved buyout shops (for the same time period), raising a meager $20 million.

This year’s biggest deal so far was Triumph Group’s $984 million buy of Vought Aircraft Industries from The Carlyle Group. The politically-connected PE firm gained a one-third stake in Triumph. The deal closed in June.

Buyout shops are the leading and, in some cases, only buyers for several other companies that are up for sale, according to the Wall Street Journal.

JLL Partners has put McKechnie Aerospace up for sale. PE shops like Carlyle, Goldman Sachs Capital Partners and the Blackstone Group are interested in the Irvine, Calif.-based firm. JLL is seeking $1.2 billion for McKechnie, the WSJ said.

Space Systems/Loral Inc., which is owned by Loral Space & Communications Inc., may also look to sell. Space Systems filed for an IPO in June but volatility in the  market could put a damper on the offering. Space Systems may go up for sale, seeking $800 million. But buyout shops want to pay $600 million, the WSJ said.

Northrop Grumman Corp. is spinning off its naval division but a sale of the unit, which builds naval ships, submarines  and aircraft carries, could fetch around $3 billion. A PE shop would be the most likely buyer, according to the story.