Market Trends of Mergers And Acquisitions (M&A) In Aerospace And Defense Industry
The Aerospace Segment is Projected to Witness the Highest Growth During the Forecast Period
The aerospace sector has experienced a notable expansion in recent years, marked by significant advancements in technology and innovation. The sector, however, encountered unprecedented challenges due to the pandemic, which resulted in sharp declines in air travel and a significant decrease in demand for aircraft. Nevertheless, the sector demonstrated remarkable resilience and a strong recovery post-pandemic in 2022 and 2023.
As the aerospace sector evolves, major companies focus on business expansion through acquisitions. These strategic initiatives aim to enhance their capabilities, improve their market position, and drive growth in the highly competitive global market. For instance, in February 2024, BAE Systems PLC completed the acquisition of Ball Aerospace from Ball Corporation for USD 5.5 billion. Through this acquisition, BAE Systems will add science, space, and defense capabilities to its portfolio under the new Space and Mission Systems division. Similarly, in September 2022, Parker-Hannifin Corp., a motion and control technologies company, completed the acquisition of Meggitt PLC, an aerospace and defense components manufacturer, for approximately GBP 6.3 billion. With this acquisition, the Parker Aerospace Group aims to expand its portfolio with Meggitt's global defense and aerospace technologies.
Apart from acquisitions, various aerospace companies have been involved in mergers to solidify their position in the global market. For instance, in March 2024, XTI Aircraft Company and Inpixon merged their business units to form XTI Aerospace Inc. Through this merger, the companies are focusing on revolutionizing private air transportation with its TriFan 600 Vertical Lift Crossover Airplane. Similarly, in January 2024, Vistara announced that it expects to receive all legal approvals for its proposed merger with Tata Group-owned Air India. The process is expected to be completed by the first half of 2024. The merger was proposed by Singapore Airlines in November 2022. Thus, the increasing focus of aerospace companies to acquire start-ups or business domains of other companies is expected to drive the market's growth during the forecast period.
Europe is Expected to Exhibit the Highest Growth During the Forecast Period
Europe is expected to record highest growth during the forecast period. Europe has a well-flourished aviation and defense sector due to the massive demand from end users and the presence of top aviation and defense companies in the region. Airbus SE, Saab AB, THALES, BAE Systems, Dassault Aviation SA, and Safran SA are major players with significant market shares in the aerospace and defense sector.
An increasing number of air travelers, the growing construction of new airports, and rising aircraft deliveries are driving the regional commercial aviation market. The rising demand for business jets and general aviation aircraft and increasing procurement of helicopters for numerous applications are driving the aviation sector.
The key players in the aerospace sector focus on mergers and acquisitions to expand their business. For instance, in January 2023, Airbus Helicopters completed the acquisition of German-based ZF Luftfahrttechnik. The company has a global customer base and manufactures dynamic components for light and medium helicopters, including related services. In addition, the company is the MRO components supplier for military helicopters. With this acquisition, Airbus Helicopters expanded its range of MRO capabilities and secured additional competencies in dynamic systems.
Also, in April 2022, Airbus Defence and Space announced the acquisition of DSI Datensicherheit GmbH (DSI DS). This German-based company provides cryptography and communication systems for airborne, space, naval, and ground, certified by the Federal Office for Information Security (BSI). The company will operate under a new name: Aerospace Data Security GmbH. The acquisition would strengthen Airbus' cryptography capabilities and improve the development of end-to-end secured systems.
Growing cross-border conflicts, political disputes, and tensions among neighboring countries created a warfare situation in Europe. The Russia-Ukraine War and the growing expenditure from NATO countries to enhance defense capabilities aided the market's growth across the region. For instance, in February 2024, THALES acquired Cobham Aerospace Communications for USD 1.1 billion. THALES is expected to create a significant trend toward connected cockpits through this acquisition.
Thus, increasing expenditure on procurement by vendors and businesses from other companies to expand product portfolios is expected to improve the company's overall performance and customer base, driving the market's growth during the forecast period.
