The defense industry reported 574 transactions worth US$62.6 billion in 2011. Deal activity fluctuated on a monthly basis and peaked in June 2011, while September 2011 recorded the lowest activity. Second half of the year recorded a decline in deal activity compared with first of the year. When considering quarterly deal activity, deal activity was the highest in Q22011 and the lowest in Q32011. Majority of the transactions in the defense industry were M&A transactions followed by partnership transactions.
The C4ISR Electronics and IT sector dominated the deal activity in the year, followed by the aerospace products and parts manufacturing segment. The principal drivers of deal activity remained scaling-up business and geographical expansion, with a primary focus on mitigating risks associated with dependence on domestic markets, and exploring opportunities arising from emerging markets. Another wave of consolidation in the defense industry was seen in 2011 and this trend could continue in the short to medium term, amid government budget cuts for military spending in the US and Western Europe.
Banking on attractive debt markets, companies in the defense industry raised US$11.1 billion from debt markets, compared with US$3.2 billion raised from equity markets. PE/VC investments in the industry in 2011 stood at US4.6 billion, the majority of these investments went into C4ISR Electronics and IT space. Many planned strategic sales of business units were reported in 2011, which may materialize in 2012. This gives a sense of promising deal activity in 2012 as well.
M&A activity was dominated by C4ISR Electronics and IT segment with 148 transactions worth US$26.4 billion. Strategic partnerships recorded 142 transactions, which were dominated by the North American region and the C4ISR Electronics and IT segment. The C4ISR Electronics and IT segment dominated the deal activity in the year with the highest deal activity, followed by the aerospace products and parts manufacturing segment.
The North American region accounted for the majority of the deal activity in 2011, followed by the European region. The Asia-Pacific region was the third most active in terms of overall deal activity and mainly driven by growth in emerging markets such as China and India. In BRIC (Brazil, Russia, India and China) countries, India dominated the deal activity with most number of deals, while Brazil was the least active country in the group.Report Scope
- This report includes a comprehensive analysis of the M&A, capital raising and partnering deals announced worldwide in 2011 through analytical insights from a segment and regional perspective. It also provides an extensive list of key deals and quarterly analysis by deal type, segment and region.
- The report offers an overview of the trends surrounding deal volume and deal value in 2011, by deal type, segments and region, followed by a brief analysis of the primary objectives of companies entering into various transactions in the defense industry during the year. In addition, the chapter includes league tables on financial and legal advisors.
- The report provides an extensive analysis on deals undertaken in the defense industry in 2011 by deal type, segment and region. It also provides an extensive list of the key deals in the following defense segments aerospace products and parts, army and navy vehicles, support services, training and simulation equipment and services, C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance) electronics and information technology, and ordnance and guns. This is followed by leading deals by deal type in North America, Europe, the Asia-Pacific and the Rest of the World.
Click for Report details:Annual Deal Report - Defense