Summarize this content to 2000 words in 6 paragraphs in Arabic Stay informed with free updatesSimply sign up to the Aerospace & Defence myFT Digest — delivered directly to your inbox.Defence companies are primed for a surge in deal activity as many look to deploy growing cash piles to invest in technologies such as artificial intelligence, sophisticated drones and space systems.Global conflicts, including the war in Ukraine, have accelerated the development of new technologies, which is expected to drive dealmaking in the next few years as companies look to expand in fast-growing areas.The leading 15 defence contractors are forecast to log free cash flow of about $50bn in 2026, according to an analysis by Vertical Research Partners for the Financial Times \u2014 almost double their combined cash flow at the end of 2021.Although larger companies are expected to continue to spend that money on share buybacks and higher dividend payouts, deal activity is also expected to increase.Michael Sion, partner at consultants Bain & Co, said he expected a pick-up in aerospace and defence M&A, and forecast an influx of funding from private equity and venture capital firms. \u201cMany companies are looking to expand what they offer to get ready for advanced technologies,\u201d he said. Larger companies, he added, would chase fast-growing parts of defence such as space and defence electronics.Meanwhile, the value of venture capital deals in the defence sector has increased 18-fold in the past decade, according to a new report by Bain. Growth has been driven in part by an increasing convergence of commercial and defence technologies. Many investors, in particular in Europe, have also been wary of backing the sector over ethical concerns but attitudes are changing following Russia\u2019s full-scale invasion of Ukraine almost three years ago. Recent corporate deals in the industry include BAE System\u2019s acquisition of Ball Aerospace, a US-based supplier of mission-critical space systems, for $5.6bn, which was announced in 2023. US defence company L3Harris agreed to buy rocket engine maker Aerojet Rocketdyne at the end of 2022.In November, drone manufacturer AeroVironment said it would acquire BlueHalo, a company known for its drone swarm and counter-drone technology, for about $4.1bn through an all-share transaction. Wahid Nawabi, chief executive of AeroVironment, said the company planned to be a \u201cnext generation\u201d prime contractor which would be focused on \u201cdefence technology\u201d. In a recent Financial Times interview Nawabi said he wanted to create a company that did \u201call the things that the [US] Department of Defense is focused on and needs\u201d. That included, he said, \u201cunmanned systems, loitering munitions, space communications\u2009.\u2009.\u2009.\u2009electronic warfare and cyber security\u201d.There was \u201clikely to be activity in what you might call the \u2018defence technology\u2019 space such as drones, AI and lasers\u201d, said Robert Stallard, analyst at Vertical Research Partners. But consolidation at the top end of the sector among the large prime contractors was unlikely, he added.Even with an \u201c\u2018anything goes\u2019 Trump Department of Justice, the US defence industry is super consolidated at the prime level\u201d, Stallard said.In Europe, meanwhile there \u201cshould be consolidation and M&A, but getting governments to agree is another thing altogether\u201d, said Stallard.Joint ventures and teaming were a \u201cmuch easier step, allowing the Europeans to pool forces without getting politicians animated over loss of sovereign capability\u201d.Bain\u2019s Sion said given the modernisation needs of the defence industry, there was an opportunity for private capital to play a larger role. Private capital, he said, could help to plug a \u201cfunding gap\u201d between US defence requirements and defence budgets.It could help to solve some of the \u201cchallenges of the defence industrial base\u201d, such as \u201ccapacity growth, improving operations and delivery\u201d, he added.<\/p>\n","protected":false},"excerpt":{"rendered":"
Summarize this content to 2000 words in 6 paragraphs in Arabic Stay informed with free updatesSimply sign up to the Aerospace & Defence myFT Digest — delivered directly to your inbox.Defence companies are primed for a surge in deal activity as many look to deploy growing cash piles to invest in technologies such as artificial<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[63],"tags":[],"class_list":{"0":"post-152121","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-tech"},"_links":{"self":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/152121","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/comments?post=152121"}],"version-history":[{"count":0,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/152121\/revisions"}],"wp:attachment":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/media?parent=152121"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/categories?post=152121"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/tags?post=152121"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}