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Aviation History
2001
2001 - 0027.PDF
Forecasts Flight ~l International's x £ "Specialist team mahout likely ftoves^lhe ^aerospace, airline, space AEROSPACE GE's tier one rivals must respond to the Honeywell takeover CHRIS JASPER/BUSINESS EDITOR JUST WHEN it seemed that merger activi ty in the aerospace manufacturing industry had peaked, along came the world's biggest company and put an industrial-sized span ner in the works of the other tier ones. General Electric's, take-over of Honeywell will create a giant among aerospace suppliers - smaller than the primes, but considerably bigger than its direct rivals, which now face a major headache. With Northrop Grumman clpsing 2000 by purchasing Litton, aerospace analyst Neil Hampson of Roland Berger calculates that in terms of transaction value, 2 000 was the busiest year ever for deals completed. "If we stack up GE-Honeywell and the rest, this is the biggest year for aerospace merger and acquisition activ ity," he says. "It has got bigger every year, but in pure value terms this will probably be the biggest for many years to come." Hampson says GE's swoop will lead to "a redefinition ofthe tier ones", and is "so com pelling" that in 2001, companies such as Rolls- Royce, UTC, Thales, BFGoodrich and Rockwell International will want to counter it. Vertical mergers - building size, rather than specialty-would be one response. At the level of the primes, the Northrop- Litton deal may be the last big merger of its type, with future moves likely to be trans atlantic. The merger, which should secure Northrop's future as a major defence systems player, means that the two primes on either side ofthe Atlantic which had seemed most in dan ger of being left behind by the consolidation process have now acted to keep pace with the opposition: the other straggler, Thomson-CSF (now Thales), pulled off a major coup by pur chasing Racal Electronics. Elsewhere among the primes, merger activi ty has centred on niche buys aimed at adding new competencies, such as Boeing's purchase of Hughes Satellite Systems, which catapulted Boeing into number one position in the space launcher market, significantly changing the weighting and - ultimately -the direction ofthe world's biggest aerospace manufacturer. While the logic of aerospace consolidation now points to transatlantic moves, these must await an easing-up of ownership restrictions, which may or may not come with the new US presidency. Transatlantic ventures established this year - between Northrop Grumman and FLIGHT INTERNATIONAL 2 - 8 January 2001 25
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