Case studies of merger activity in the defense industry since 1993.
Zegley, Gary R.
Louvau, Gordon E.
Moses, Douglas O.
MetadataShow full item record
o cope with a shrinking defense budget, the U.S. defense industry has undergone an unprecedented wave of consolidation. Since 1993, Moody's Investors Service has counted over 20 defense industry mergers and acquisitions. Reasons given for the consolidation include achieving critical economies of scale and combining complementary resources in a bid to remain competitive in a capital intensive industry. This thesis examines the financial impact of three merger/acquisition events: Northrop's purchase of Grumman, Lockheed's merger with Martin Marietta, and Raytheon's acquisition of E-Systems. Analysis is conducted to assess financial condition as revealed in an examination of financial ratios and financial prospects as revealed in an examination of market value and market returns. Financial condition of the firms was marked a decline in relative profitability and a degradation in solvency for those that made purchase type acquisitions. Despite negative impacts to many financial performance measures, stocks of these companies achieved total returns in excess of the Standard and Poor's 500 index in the year of the merger event. Price earnings ratios also increased in relation to the S&P 500 P/E, showing that investors may have looked past short term costs of restructuring for longer term gain as a result of the consolidation
Showing items related by title, author, creator and subject.
An empirical analysis of the patterns in defense industry consolidation and their subsequent impact Nayantara, Hensel (Monterey, California. Naval Postgraduate School, 2007); NPS-AM-07-106The defense industry has witnessed significant consolidation since the end of the Cold War. This paper explores the causes of the wave of defense mergers, as well as their impact. The analysis finds that the frequency of ...
Defense industry mergers and monopoly power : analysis of abnormal earnings using the Edwards-Bell-Ohlson model Heisey, J. Mark (Monterey, California. Naval Postgraduate School, 1997-12);Recent defense industry consolidation has created several large defense firms. As a result of merger activity with their suppliers and competitors, these firms account for an increasing percentage of sales to the Department ...
Naval Postgraduate School Center for Homeland Defense and Security (CHDS) (Monterey, California. Naval Postgraduate SchoolCenter for Homeland Defense and Security, 2009-01);January 2009. In this issue of Homeland Security Affairs we offer one essay that outlines some of the important homeland security issues of 2008 and a set of essays that describes a potentially significant change in the ...