Qatar jet deal a win for BAE but a loss for London 18 Sep 2017 A deal to buy Typhoon fighter jets will secure thousands of UK manufacturing jobs. But building stronger defence ties with the sheikhdom is a risk when its squabble with Saudi Arabia is unresolved. That could backfire if the kingdom reacts by vetoing a London listing for Aramco.
Cobham’s repeat cash call shows danger in defence 2 Mar 2017 The troubled British military electronics maker is anything but defensive. After reporting a full-year loss it has unveiled plans to raise 500 mln pounds through its second rights issue in a year. Despite hopes for higher spending on armaments, a recovery could be elusive.
Pilot error poses biggest risk to Thales ascent 28 Feb 2017 A successful restructuring has left the French defence and aerospace group well positioned to benefit from any increase in governments’ defence spending. The biggest hazard is that growing financial strength may tempt boss Patrice Caine into value-destroying big-ticket M&A.
Trump wraps U.S. budget flaws in $54 bln flag 27 Feb 2017 Boosting military spending by that sum largely at the expense of diplomatic soft power may please ardent supporters. Fixing Defense Department mismanagement would be wiser, though, and avoid a clash in the president's own party. Jingoism risks bringing higher costs in many forms.
Russia austerity budget is no antidote to low oil 2 Nov 2016 Moscow wants to freeze spending to cut the country’s deficit amidst a low oil price. Yet the three-year budget doesn’t tackle Russia’s dismal growth, or wasteful spending on damaging conflicts. And President Vladimir Putin may not stick to the cautious plan.
Nuclear subs are symbol of UK’s ebbing charm 18 Jul 2016 Renewing its ageing fleet of Trident submarines is one way for the UK to punch above its weight. It’s even possible to justify the 31 bln pound cost as a stimulus, since British companies like BAE Systems benefit. Hard power gets more alluring when soft power is in retreat.
Trump and UK’s Leave campaign are peas in a pod 27 Jun 2016 Like the Brexiteers, the presidential nominee says things often disproven by facts. He makes promises without plans to enact them. When these prove unworkable, there’s regret and backtracking. By invoking NATO’s future, the stakes may be as high or higher for a Trump victory.
U.S. anti-gun rulings put freer markets in sight 8 Mar 2016 Courts have upheld assault-weapons bans, adding heft to a Connecticut suit that tests laws shielding firearms firms from liability. The case is still a stretch, but growing assent to gun-rights limits may force the likes of Remington to compete without unfair legal protection.
Rolls-Royce’s board activist is double-edged sword 2 Mar 2016 U.S. activist fund ValueAct has a seat on the board of Rolls-Royce. If the engine maker’s No. 1 shareholder musters enough patience, it can underpin the turnaround engineered by CEO Warren East. But should it push for quick fixes like a breakup, Rolls’ predicament could worsen.
Rob Cox: Wal-Mart just shy of target on gun front 6 Oct 2015 Like CVS with smokes, the retailer stopped selling AR-15 rifles, the kind used in an Oregon college shooting, because it’s bad business. Yet Wal-Mart blocked a Wall Street parish’s plan to make that and similar policies permanent. The church’s case merits Supreme Court review.
Defense-minded Lockheed plays strong offense 20 Jul 2015 The U.S. arms supplier has struck a solid deal to buy the Sikorsky helicopter business. A big tax break reduces an already reasonable headline price of $9 bln. Lockheed’s plan to spin off or sell other less profitable units further attacks the problem of a leaner Pentagon.
Review: Dealmaking when lives are at stake 10 Jul 2015 Financiers like to compare their negotiations to military strategy. Yet the art of the deal matters far more when those talking also kill. Jonathan Powell’s “Terrorists at the Table” is a primer like few others, by a worldly ex-diplomat of stubborn hope. It’s also darkly funny.
Palantir’s mystery inflates its $20 bln valuation 24 Jun 2015 The private data analytics firm beloved by government intelligence is raising $500 mln. Going public may not be an option for Palantir given its clients and culture. That deepens the enigma that further feeds its potential value - a James Bond privacy premium of sorts.
China-U.S. shift will end Cold War peace dividend 22 Dec 2014 The PRC’s military outlays may match Uncle Sam’s in 15 years, while U.S. policy paired with Russian aggression could force up EU spending. Western defense firms face more competition, but added demand. Governments may have to choose between just rearming and an all-out arms race.
Iran’s reintegration is a prize worth working for 20 Nov 2014 Nuclear negotiations with six world powers remain contentious. Just talking reduces geopolitical risk, but bringing Iran back into the international fold would repay the effort. A newly unfettered economy, bigger than Singapore or Greece, would move the global needle.
European defence wakes up to new reality 9 Sep 2014 Conflict in Ukraine is changing national security policies. The post-1989 era of shrinking defence budgets is ending. Countries including Sweden and Poland are increasing spending. Rallying European defence stocks anticipate an enduring shift.
BAE investors shoot first, ask questions later 20 Feb 2014 Europe’s largest defence contractor spooked shareholders with a gloomy 2014 outlook and a $1.5 bln writedown. As with Rolls-Royce, investors have been slow to price in the effects of lower U.S. military spending. But the reaction - a 9 pct slump in BAE shares - looks overdone.
United Tech activist defenses look mostly robust 11 Feb 2014 Talk of the $100 bln conglomerate selling chopper-maker Sikorsky raises questions about whether a breakup could unlock value. A Breakingviews analysis suggests the pieces are worth just 8 pct more than the whole. But a performance slip could weaken the ramparts to an attack.
U.S. defense brain drain demands new thinking 24 Oct 2013 The end of the Cold War and the rise of Silicon Valley have pushed young talent to new tech firms over giant government contractors. Recent Washington gridlock could leave defense firms further behind. With military spending under long-term pressure, diversification could pay.
BAE and EADS show the value of M&A scepticism 10 Oct 2013 The European aerospace groups have outperformed their local markets since aborting their merger a year ago. That proves tough corporate self-help can trump M&A. And right now EADS can be especially grateful that Angela Merkel blocked the deal.