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2015 Year in Review
Unmanned Aerial Vehicles Update:
Unmanned Aerial Vehicles (UAVs) have been a
bright spot in the shrinking landscape of defense spending. While most are familiar with
the growth in the consumer quad-copters space, military-grade drones are also a
growing industry. The market for UAVs in 2014 was estimated to be $6.4 billion and is
expected to grow by 5.5% annually over the next nine years to approximately $10 billion
by 2024. UAVs are attractive because they are a proven technology and are a safer
alternative to manned aerial vehicles. Currently, Israel is the world’s largest exporter of
drones, but the US is quickly catching up. US-based General Atomics’ and Northrop
Grumman’s current offerings are making significant headway in the industry. On the
consumer side, Intel has been on a shopping spree for drone-related technologies having
most recently purchased Yuneec, a Hong Kong-based drone and aerospace company,
for $60 million. Other companies also seek to invest in drone technology. In the first half
of 2015, drone companies raised an estimated $172 million in equity financing. As this
burgeoning technology continues to grow, the market can expect to see continued
growth and consolidation in both the consumer and military segments.
Berkshire Hathaway’s acquisition of Precision Castparts:
On August 10, Berkshire
Hathaway announced that it would purchase Precision Castparts (PCC) for $37.2 billion.
PCC has been a supplier of choice for the world’s aerospace industry and one of
America’s largest sources of exports. This deal would represent the largest deal in the
Aerospace & Defense sector in the last decade and would be Berkshire’s largest
acquisition. PCC has a long history of being a serial acquirer of companies having
acquired four companies in 2015 and six companies in 2014. In November, PCC also
announced the acquisition of Andrew Laser Works Corp. This announcement may
indicate that PCC will continue its penchant for acquiring attractive tuck-in acquisitions
following the Berkshire integration.
2015 Aerospace Trends
Source: Open Sources, Public Filings, “Sate of the Satellite Industry Report 2014” The Tauri Group
Recent UAV Acquisitions
acquired
acquired
acquired
acquired
Mega Deal
Transaction Size ($ billions)
37.92
EV ($ billions)
36.86
EV/NTM Revenue
3.6x
EV/NTM EBITDA
11.7x
Offer Price/NTM Earnings
18.1x
Offer Price/Forward BV
2.6x
acquired