Aerospace and defense major
Lockheed Martin Corporation
) has inked a deal with Astrotech Corporation to acquire the
latter's Astrotech Space Operations ("ASO") business for an
undisclosed amount. The transaction is subject to several
approvals. If approved, the deal is expected to be completed in
Titusville, FL-based ASO is a leader in satellite launch
preparation services. It provides the necessary support required
for spacecraft processing, including pre-launch hardware
integration and testing, satellite encapsulation and fueling. The
company's launch facilities offer perfect processing areas for a
wide range of spacecraft which includes earth observation, complex
communications and deep space satellites.
To date, the company has contributed products and services to
more than 300 successful spacecraft missions. ASO serves both
government as well as commercial customers and has facilities in
California and Florida.
Post transaction, the products and services of ASO will be regarded
as Lockheed's wholly owned subsidiary and managed by its Space
Lockheed continues to expand its product coverage under the
satellite division and has completed significant deliveries. On May
22, 2014, the company announced that its Commercial Launch Services
will launch the WorldView-3 commercial remote sensing spacecraft
and place it in orbit on Aug 13, 2014 for DigitalGlobe.
On May 6, Lockheed had completed the propulsion module for the
fourth Space-Based Infrared System Geosynchronous Earth Orbit space
vehicle. The latest addition of a satellite launch services
provider will enable Lockheed to strengthen its product and service
offering under the Space Systems operations besides increasing the
Lockheed makes strategic acquisitions that boost its product
coverage and increase market penetration. In Mar 2014, the company
acquired BEONTRA AG, which provides integrated planning and demand
forecasting tools for airports. The company also signed several
acquisition contracts, including Industrial Defender in Mar 2014
and Amor Group last year.
We see a number of recent deals in the aerospace sector prompted
perhaps by shrinking budgets and a need for consolidation in the
industry. In Apr 2014,
Alliant Techsystems Inc.
) announced that it will form a new entity, combining its Aerospace
and Defense Groups with another firm
Orbital Sciences Corp.
). This initiative will enable Alliant Techsystems to focus more on
Lockheed maintains a strong liquidity position backed by an
efficient cash generation capacity. As of Mar 31, 2014, the
company's cash balance was around $3.26 billion, up from roughly
$2.62 billion as of Dec 31, 2013. In the first three months of
2014, operating cash flow edged up 0.7% to $2.1 billion from the
prior-year level. A strong financial position enables Lockheed's
systematic acquisition program.
Lockheed currently has a Zacks Rank #3 (Hold). However, a
better-ranked stock in the aerospace and defense sector is
), which carries a Zacks Rank #1 (Strong Buy).
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