Warren Romine, managing director at KippsDeSanto & Co., has said more middle-market defense contractors are considering divestitures as they assess their capacity to keep up with market trends, the Washington Business Journal reported Monday.
Romine told the publication in an interview he expects increased U.S. defense budget and low interest rates to also drive acquisition and divestiture efforts.
He noted that industry players looking to enter into M&A deals will need to assess their business portfolio for units that do not get enough focus.
“It still comes down to core versus noncore operations,” he noted. “Where do I think I will make more money and the businesses will grow over time?"
His remarks came after BAE Systems announced its agreement to purchase the military GPS segment of United Technologies Corp.'s (NYSE: UTX) Collins Aerospace business as well as Raytheon’s (NYSE: RTN) airborne tactical radio segment for a total of $2.2B.
L3Harris Technologies (NYSE: LHX) had to divest Harris' night vision business to receive U.S. antitrust approval for the merger in July of last year.
