U.K. Aerospace M&A Slows After Biggest Suppliers ‘Cherry-Picked’

Almost half the U.K.’s aerospace and defense suppliers were acquired in the last 25 years, with only 21 takeovers occurring since the financial crash.

A combined 174 deals affecting 101 businesses in the U.K. were completed from 1990 to 2014, according to a review of 207 British and foreign-owned companies published by the Institute for the Study of Civil Society Friday. Transactions peaked at 17 in 2000 and increased the percentage of foreign ownership by more than a quarter.

Aerospace and defense companies, which went through a steady consolidation after the collapse of the Soviet Union, retained a strong position in the U.K. amid a broader decline in manufacturing. Companies that avoided buyouts were small, with a median annual revenue of 4 million pounds ($6.2 million).

“Large companies ‘cherry-picked’ the most attractive targets in the supply chain, contributing, along with the financial crisis, to a marked slackening in M&A activity since 2007,” said Norman Smith and Joseph Wright, authors of the study. “Those that remain in British hands tend to be smaller firms with less promise of growing into significant players in the global market.”

A small group including France’s Thales SA, General Electric Co., Munich-based Siemens AG and U.K.-based Cobham Plc and GKN Plc, were among the most active buyers, accounting for 16 purchases over the period. The companies targeted in those deals had average sales of 150 million pounds.

The most common goal for buyers was to gain control of intellectual property, technology and expertise. The total number of U.K.-based aerospace and defense suppliers declined to 155 from 207 over the period, according to the institute.

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