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Raytheon (RTX) to Acquire FlightAware, Boost Portfolio

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Raytheon Technologies Corporation’s (RTX - Free Report) business unit, Collins Aerospace, recently inked an agreement to acquire a privately held, flight-tracking data provider, FlightAware. Per the deal, FlightAware will join the Collins' Information Management Services portfolio in Avionics strategic business unit.
However, the financial terms of the deal have been kept under wraps. The completion of the acquisition is subject to customary closing conditions and regulatory approvals.

Rationale Behind the Acquisition

Lately, bigwigs of defense industry have been engaging in strategic mergers and acquisitions in a bid to expand and diversify their product portfolios. Such transactions have been increasingly gaining importance as they enable companies to achieve desired growth by expanding operations, and provide access to new capabilities and emerging technologies. This, in turn, leads to enhanced quality of products and services. Such consolidations have not only been helping defense primes capture increased shares in the growing defense space but also achieve improved scales of economies. We believe the said factors played a crucial role in Raytheon’s latest acquisition agreement.

Benefits of the Merger

Flight data analysis and monitoring form an integral part of running smooth aerospace operations in a nation. To this end, it is imperative to mention that Raytheon’s Collins Aerospace business unit is a leading provider of flight control systems. Hence, the acquisition of FlightAware, which currently operates the world's largest flight-tracking and data platform, will surely strengthen Raytheon’s footprint in the flight data monitoring market.
With North America possesses one of the largest aerospace industries worldwide, the market for flight data monitoring boasts solid growth opportunities in the continent. Case in point, as estimated by Mordor Intelligence research firm, the flight data monitoring market is projected to witness a CAGR of more than 3%, during 2021-2026 period. Considering the growth prospects for this market, the FlightAware acquisition will drive Raytheon’s profitability in the days ahead.

Acquisitions By Peers

Of late, we have witnessed quite a few major mergers and acquisitions within the U.S. defense space despite the global volatile market conditions stemming from the COVID-19 pandemic. Let’s have a look at few such acquisitions.
In May 2021, Teledyne Technologies (TDY - Free Report) completed the acquisition of FLIR Systems, one of the pioneers in thermal imaging, in a cash-and-stock deal worth approximately $8.2 billion. In the same month, Leidos Holdings (LDOS - Free Report) completed the acquisition of Gibbs & Cox for approximately $380 million in cash.
Earlier, in July 2020, BAE Systems (BAESY - Free Report) completed the buyout of the Collins Aerospace Military Global Positioning System (GPS) business.

Price Performance

In the past 12 months, shares of Raytheon have gained 36.7% compared with the industry’s rally of 7.9%.

Zacks Investment Research
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Zacks Ranks

Raytheon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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