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Consolidation expected in Australian defence sector

written by australianaviation.com.au | May 15, 2010

Jane’s Industry Quarterly has forecast that there will be increased merger and acquisition activity within Australia’s defence industry as a result of the government’s Defence White Paper and the continued appetite of international firms to bid for Australian contracts.

“M&A activity stalled in 2009 as investors waited on the sidelines while Australia set out its priorities,” commented Guy Anderson, senior analyst for Jane’s. “The Australian Defence White Paper brought clarity to the market, with an emphasis on areas such as undersea and anti-submarine warfare; surface naval warfare; air superiority; strategic strike; intelligence, surveillance and reconnaissance and cyber-security points. We expect to see international defence firms pursuing targets with exposure to these areas as they look to offset flatter defence spending in their home markets”.

The forecast adds that it expects to see acquisitions of smaller companies with niche capabilities over the next two years, led primarily by western operators with an existing presence in Australia.

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