Merger and Acquisition Activity in the Aerospace & Defense Sector Reaches a Seven-Year High, According to PricewaterhouseCoopers

Two-Thirds of Deals Take Place in the United States


NEW YORK, July 14, 2008 (PRIME NEWSWIRE) -- Merger and acquisition activity in the Aerospace & Defense (A&D) sector reached $30.8 billion in 2007, the highest level since 2000, according to the PricewaterhouseCoopers LLP report, "Flying High - Aerospace and Defence M&A." Nearly two-thirds of total deal value was invested in North America with another one-third invested in Europe. Average deal size also increased, reaching a high of $280 million in 2007, up significantly from the low of $100 million in 2003.

Of the top 10 deals in 2007, nine involved companies in the United States, with a U.S. company serving as the acquiring entity in six of those deals. North American investors accounted for the majority of North American acquisitions, investing $10.3 billion during the year. However, European companies invested over four times more in the United States than they did in 2006. In 2007, European companies poured $6.6 billion into deals in the United States compared to the $1.5 billion invested in 2006. At the same time, deals involving a European buyer and a European target fell by 80 percent in 2007 to $2.1 billion from $11.1 billion in 2006.

Private equity participation in the sector also continued to rise, reaching an all-time high in 2007, with 36 percent of all deals involving financial investors. Five of the 10 largest deals in 2007 involved private equity, following the trend of steadily increasing participation since 2000. Of the 10 largest deals involving private equity in 2007, nine included a U.S. company.

"The A&D industry remains strong, and the high levels of M&A and private equity participation in the deals is a visible sign," said Andrew Cristinzio, transaction services leader for the aerospace and defense sector with PricewaterhouseCoopers. "The United States was a major player in M&A in 2007, and that trend seems likely to continue throughout 2008, given the weakening of the dollar and a less stable level of defense spending in Europe."

While deals in the rest of the world (RoW) only accounted for five percent of deal value in 2007, they accounted for 20 percent of all deal volume. Of the 43 announced RoW deals, 25 represented investments in the BRIC countries (Brazil, Russia, India and China). The past two years have also seen the emergence of Middle-Eastern investors. In 2007, $1.8 billion flowed into North American companies from investors located in the Middle East.

A full version of "Flying High - Aerospace and Defence M&A" is available for download beginning on July 14th at: www.pwc.com/aerospaceanddefence.

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