The global economic crisis is affecting the defense and aerospace industries. According to a report entitled "Aerospace and Defense Deals 2008" published by Israeli accountancy firm Kesselman and Kesselman - PricewaterhouseCoopers Israel, the volume of mergers and acquisitions (M&A) in these sectors fell sharply in 2008.
The report finds that the number of M&A deals in the defense and aerospace sectors fell by 50% in 2008 to $14.3 billion compared with $32.9 billion in 2007.
A geographical breakdown of the figures found that North America and Europe were responsible for 89% of the value of these deals - $12.7 billion.
In these sectors, the report found that the slowdown began in the second quarter of 2008 and became far more severe in the final quarter of the year, when deals worth an average of just $22 million were recorded.
Relating to the possible ramifications for Israel's security industry, Kesselman and Kesselman - PricewaterhouseCoopers Israel Assurance Leader and Risk Management Partner Assaf Shemer said, "The credit crunch and the stagnation in the capital market might bring a flood of opportunities for Israeli companies in the defense sector to invest in relatively small companies developing advanced technologies for use against the threat of terror, Internet crime, piracy and other niche technologies."
Kesselman and Kesselman - PricewaterhouseCoopers Israel expects that these niche technologies will continue to create opportunities for growth in the defense and security sector.
Published by Globes [online], Israel business news - www.globes-online.com - on March 10, 2009
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