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M&A bankers hope BAE Systems’ US acquisitions set the trend for 2020

Dealmakers are optimistic about a pick-up in large deals and outbound M&A from Europe this year, but the need for regional consolidation is more urgent.


On Monday, UK defence company BAE Systems announced two acquisitions worth $2.2 billion in the US.

It will pay Collins Aerospace $1.925 billion for its military global positioning system (GPS) assets and Raytheon $275 million for its airborne tactical radios business.

For M&A bankers in Europe, it’s a promising start to the year that recalls BAE’s acquisition spree in the early 2000s when it established itself as a force in the US. It acquired Lockheed Martin’s aerospace electronics systems for $1.67 billion in 2000 and then United Defense Industries for $4.2 billion in 2005, as well as a host of smaller bolt-ons.

The firm hasn’t done a deal of this size since the financial crisis. Bankers say BAE Systems has restored its financial strength and was ready and eager to pounce when these disposals came up and was therefore able to beat potential US rival bidders.

Bankers were pleased to see the BAE Systems share price rise on the day of announcement, saying this is a signal that European companies seeking growth through outbound M&A may be supported by shareholders.

Global M&A revenues fell 10% last year, according to Dealogic, and there was a sharp disparity between the US, where revenues fell by just 8%, and Europe where they declined by 18%.

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