The dollar's weakness appears to have spurred a wave of opportunistic bids for U.S. companies by foreign buyers. Take InBev’s $52 billion acquisition of Anheuser-Busch
Defense revenues alone won’t do
Aerospace and defense firms are diversifying into commercial markets and looking for opportunities to serve military and civilian markets. In 2006, for example, Lockheed Martin
The acquisition of Jet Aviation is a great example of the “civil aviation wave” that is reshaping the aerospace and defense sector. (In the other direction, we have Boeing's
“The future of aviation isn’t just about airlines”
As consulting firm CRA International writes: “The future of aviation isn’t just about airlines -- it’s about individuals.” Indeed, personal jets are becoming cheaper and faster. As the “majors,” including UAL’s
As wealth spreads to emerging markets, I expect demand for these services to grow faster than U.S. GDP. According to General Dynamics’ presentation, the worldwide fleet of business jets is expected to double within the next 10 years.
General Dynamics is paying approximately 1.5 times Jet Aviation’s estimated 2009 sales and 10 times its estimated 2009 EBITDA (earnings before interest, taxes, depreciation and amortization). I certainly wouldn’t call that outrageously cheap, but it looks like a fair price for an attractive business, and you can’t ask for much more from an acquisition.
More aerospace/defense Foolishness: