Rapid Fire 2010-07-26: Ballistic Iran

• Going Nuclear?: US, South Korea hold naval exercises, involving 20 ships and submarines and 200 aircraft, despite North Korea’s threat to use its “nuclear deterrent.”.

• Is that a Missile in Your Pocket?: A senior Iranian military commander claims that the country has the capability to mass produce ballistic missiles. To see what ballistic missiles Iran might have, check out this Council on Foreign Relations backgrounder.

• Getting Kinky: According to an industry survey by AlixPartners, kinks in the global supply chain, such as the inability of OEMs to integrate Tier 1 and Tier 2 suppliers, will continue to hurt the global aerospace and defense markets.

Sector Outperforms: Grant Thornton Lookback on Defense M&A 2009

Guest Article by Ian Cookson

If 2008 can be characterized as a year in which private equity buyers battled to acquire aircraft component manufacturers, then 2009 was a time of strategic acquirers fighting to secure defense technologies.

2009 was a relatively strong year for mergers and acquisitions. Defense technology saw a 6% increase in M&A activity in 2009 with a particularly strong second half of the year. This contrasts with M&A activity as a whole, which showed a 9% decline in the number of U.S. transactions across all sectors. M&A activity is likely to continue as the DoD, shaped by the 2010 QDR, shifts away from “big iron” and focuses on high-demand, low density assets such as unmanned aircraft, cyber security, and Command, Control, Communication, intelligence, Surveillance and Reconnaissance (C3ISR) technology. Defense contractors and government IT providers, mirroring these shifts in spending priorities, are actively looking to acquisitions to enhance their capabilities. Earnings for our defense IT company index rose 8% (EBITDA) during the year, and defense electronics company earnings rose 5%…