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ADG Q3 Industry Update
Industry News
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In the largest merger of defense companies to date, Harris Corp. and L3 Technologies, Inc. recently
announced that they will combine, forming the sixth largest defense and government services company in
the United States and one of the largest defense contractors in the world.
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In late September, President Trump signed a spending bill for fiscal year 2019 with approximately $674
billion in funding for defense, securing funding prior to the end of the government fiscal year for the first
time in nearly ten years.
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The President also signed four other spending bills for 2019, including a record budget for the
Department of Veterans Affairs, and continuing resolutions for the remaining budgets through December
9, 2018.
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Following years of protests, the U.S. Army issued awards on the $12.1 billion Information Technology
Enterprise Solutions 3 Services (“ITES-3S”) to 52 unrestricted and 83 small-business set-aside awardees.
Capital Markets Highlights
% Change
The McLean Group ADG Public Indices
September
2018
Q3 2018
TTM
Defense Prime Index
6.79%
9.94%
21.46%
Defense Systems Index
1.94%
17.50%
37.28%
Diversified Government Services Index
(4.61%)
11.52%
22.30%
Middle Market Government Services Index
(1.50%)
5.98%
8.30%
Large Cap Aerospace Index
6.29%
10.32%
34.92%
Mid Cap Aerospace Index
4.28%
13.65%
24.16%
Small Cap Aerospace Index
12.46%
33.97%
33.67%
International Aerospace Index
5.31%
10.49%
20.71%
S&P 500
0.60%
6.87%
15.22%
Notable M&A Activity
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Science Applications International Corp. (SAIC) announced that it will acquire Engility Holdings, Inc. for
$2.5 billion.
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Integrity Applications, Inc., a portfolio company of Arlington Capital Partners, acquired Dependable Global
Solutions, Inc. for an undisclosed amount.
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Alion Science and Technology Corp., a portfolio company of Veritas Capital, acquired MacAulay-Brown,
Inc. for an undisclosed amount.
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L3 Technologies, Inc. acquired Applied Defense Solutions, Inc. for $50.0 million.
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EverWatch, a portfolio company of Enlightenment Capital, acquired ACES, Inc. for an undisclosed amount.
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CAE USA Mission Solutions, Inc., a subsidiary of CAE, Inc., acquired Alpha-Omega Change Engineering, Inc.
for $29.0 million.