Mergers and acquisitions (M&A) specialist Grant Thornton LLP (Boston, Mass.) reports that aerospace component makers continue to be attracted to companies with composite capabilities; however, few acquisition targets of scale are available. Consequently, some strategic component manufacturers are expanding their own businesses organically, as they can no longer ignore the importance of working with composite materials. The findings are in the company's “Aerospace & Defense Update: Mergers, Acquisition and the Operating Environment.”
“The now cost-effective composites comprise 50 percent of content on new generation planes and require fewer parts, resulting in less assembly. In addition, composites improve fuel economy by reducing weight and allowing increased passenger loads,” according to Ian Cookson, director, Investment Banking, Aerospace and Defense Group, Grant Thornton LLP.
Cookson notes that fuel accounts for about 63 percent of airline operating costs in North America; therefore, any slight improvement in fuel consumption via a decrease in aircraft weight equates to significant savings. Additionally, green-conscious consumers — particularly in Europe — are pressuring airlines to decrease fuel consumption and reduce the carbon footprint of their fleet.
The Grant Thornton LLP Aerospace and Defense Update proposes that many composite businesses failed to see the growth they expected in 2009, as much of the market was tied to the Airbus A400M and and Boeing 787 — which have faced well-publicized delivery delays.
“Because orders were pushed back and revenues failed to materialize, acquirers are coming to view the environment as a buying opportunity, while potential sellers whose pricing expectations are unchanged seek to defer transactions until revenues ramp up,” concluded Cookson.
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