PwC Deals $15B $485M. Executive summary. Trends and highlights

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1 PwC Deals Global Aerospace and Defense Deals Insights Q1 218 Aerospace and defense deal activity remains strong into 218 Executive summary The beginning of 218 can be marked by easing fiscal policy, tightening monetary policy, and turbulent trade policy. While changes in fiscal and monetary policy do not pose an immediate risk to economic growth, recent trade disputes could disrupt industry supply chains and in turn impact global GDP. Each of these trends has possible implications for M&A activity in the sector. Where there is change, there is opportunity, and liquidity will be key to taking advantage of that opportunity. While lower corporate taxes will provide industry players with additional capital to pursue acquisitions, the sector has enjoyed a strong cash position for several periods now. Amplifying the critical role of this liquidity in deal making are increasing interest rates, which will make debt financing more expensive. Where there is change, there is opportunity and liquidity will be key to taking advantage of that opportunity. Bob Long Aerospace and Defense Deals leader, PwC US On balance, we believe the continued growth in aviation and strengthening trends in defense, combined with a strong financial position, place the sector in a solid position to drive M&A activity amid disruption and uncertainty. Trends and highlights Deal value in Q1 218 was just over $15 billion, 28% above last quarter and 19% higher than Q There were 86 deals this quarter, 19% lower than Q However, the average deal size jumped 89% to $485 million, 39% higher than the three-year historical average of $349 million, largely as a result of General Dynamics $9.6 billion acquisition of CSRA. This was the largest deal of the quarter and accounts for 64% of deal value in the period. Seventy-three percent of deal value remains in North America and 99% of global deal value was exchanged domestically (within country borders). Total deal value $15B Total deal volume 86 Average deal size $485M 218 YTD versus 217 YTD Q1 218 versus Q % 28% 19% 26% 61% 89% Source: Thomson Reuters

2 Average disclosed deal value ($mn) Deal value ($bn) Global A&D Deals Insights Q1 218 Deal activity Total deal value and volume Aerospace and defense deals remained high into 218. Over $15 billion in deal value was announced in Q1, 8% higher than the 1-year historical quarterly average of $8.3 billion. M&A activity continues to be driven by geopolitical tensions, portfolio shaping and a quest for scale in certain sub-sectors, in particular government services $ $ Largest transaction 1 5 $4 $5 $1 $7 $6 $17 $13 $6 $12 $ In February, General Dynamics agreed to acquire CSRA for $9.6 billion. CSRA is a Virginia-based provider of computer system design services for the US government, formed by Disclosed deal value Deals by disclosed value (R-Axis) the combination of CSC s government services business with SRA in late 215. The acquisition represents a strategic effort to increase cost-effective IT solutions and services to $982 $ the Department of Defense, the intelligence community, and 12 8 federal civilian agencies. 1 8 $485 6 Megadeals* General Dynamics acquisition of CSRA was the only megadeal announced in the first quarter of 218. Other notable transactions include a $96 million sale of Shanghai Waigaoqiao Shipbuilding to CSSC Holdings and Elbit Systems $552 million acquisition of Israel Military Industries $15 $81 $256 $183 $137 $37 $31 $128 $256 Undisclosed <$5 mn $5 mn to $25 mn $25 mn to $1, mn >$1, mn Average deal size (R-Axis) 4 2 Sector category analysis The category has contributed to the majority of deal value in the sector over the last two quarters. Large acquisitions of IT companies, like CSRA and Gemalto, show efforts to drive scale and synergies in the presence of margin pressure. We also see lower activity in the Aircraft & Parts and Arms & Vehicles categories this quarter. Aircraft and Parts Arms and Vehicles Electronic Equipment Raw Materials and Supplies Software and Supporting Services Deal value ($bn) *Megadeals are defined as deals with disclosed value equal to or greater than $5 billion USD. PwC Deals Global A&D Deals Insights Q

3 27% 35% 24% 34% 35% 36% 28% 9% 3% 46% 7% 71% 19% 47% 8% 79% 4% 43% Global A&D Deals Insights Q1 218 Financial vs. strategic investors Strategic investors continue to contribute to the largest share of deal activity in the sector. Ninety percent of value and 73% of volume was attributed to transactions by strategic players this quarter Deal value ($bn) Strategic investors Financial investors Financial investor share of M&A activity 7% % % % % 2% % 1% 5 % Financial buyer share of total value Financial buyer share of total volume Regional analysis The North American region remains the most active acquirer by value, with 73% of deal value in Q This pattern carries over to target regions, with North America accounting for 73% of target value. in the Asia and Oceania region remains the highest, however, it observed 23% fewer targets and 15% fewer acquirers this quarter. Share of deal volume by acquirer region Share of deal value by acquirer region 1% 1% 9% 9% 8% 8% 7% 7% 6% 6% 5% 5% 4% 4% 2% 2% 1% 1% % % PwC Deals Global A&D Deals Insights Q

4 27% 28% 23% 31% 31% 24% 34% 9% 3% 46% 4% 71% 15% 45% 9% 82% 3% 47% Global A&D Deals Insights Q1 218 Regional analysis (continued) Share of disclosed deal volume by target region Share of disclosed deal value by target region 1% 9% 8% 1% 9% 8% 7% 7% 6% 6% 5% 5% 4% 4% 2% 2% 1% 1% % % A&D deals by region North America Local: 24 deals, $11. billion Inbound: 4 deals, $ billion Outbound: 3 deals, $ billion UK and Eurozone Local: 9 deals, $.1 billion Inbound: 1 deal, $ billion Outbound: 5 deals, $ billion Europe ex-uk and Eurozone Local: 14 deals, $ billion Inbound: 4 deals, $ billion Outbound: 1 deal, $ billion Asia and Oceania Local: 27 deals, $3.8 billion Inbound: 2 deals, $ billion Outbound: 1 deal, $ billion South America Local: deals, $ Inbound: deals, $ Outbound: deals, $ Africa/Undisclosed Local: 1 deal, $.1 billion Inbound: deals, $ Outbound: 1 deal, $ billion A&D deals outlook Our view is that the strength in deal making seen in 217 and this first quarter of 218 will continue. The sector will leverage a solid cash position to take advantage of opportunities, shape portfolios and gain scale where advantageous. The majority of transactions will be at the mid to small end and be driven by strategic investors. However, there remain opportunities for mega-deals in the sector. While there are uncertainties such as tariffs and trade negotiations, we believe industry players will continue to seek a path focused on accretive transactions within their core businesses. PwC Deals Global A&D Deals Insights Q

5 Global A&D Deals Insights Q1 218 Top 1 A&D deals 218 Announced Target name Target nation Acquirer name Acquirer nation Status Deal value 1 Category 2/9/18 CSRA Inc United States General Dynamics Corp United States Completed 9,591 2/14/18 Shanghai Waigaoqiao Shipbuilding Co Ltd China China CSSC Holdings Ltd China Pending 96 Arms and Vehicles 1/26/18 Shanghai Waigaoqiao Shipbuilding Co Ltd China Investor Group China Completed 756 Arms and Vehicles 3/11/18 Israel Military Industries Ltd Israel Elbit Systems Ltd Israel Pending 552 Arms and Vehicles 3/19/18 Extant Components Group Holdings Inc United States TransDigm Group Inc United States Pending 525 Electronic Equipment 2/2/18 e-builder United States Trimble Inc United States Completed 5 2/26/18 CSSC Huangpu Wenchong Shipbuilding Co Ltd China 1/26/18 Guangzhou Shipyard International Co Ltd China CSSC Offshore & Marine Engineering (Group) Co Ltd CSSC Offshore & Marine Engineering (Group) Co Ltd China Pending 415 Supporting Services China Pending 415 Arms and Vehicles 1/26/18 Guangzhou Shipyard International Co Ltd China Investor Group China Pending 38 Arms and Vehicles 1/19/18 FMH Aerospace Corp United States AMETEK Inc United States Completed 235 Aircraft and Parts Top 1 A&D deals 217 Announced Target name Target nation Acquirer name Acquirer nation Status Deal value 1 Category 9/4/17 Rockwell Collins Inc. United States United Technologies Corp. United States Pending 3, Aircraft and Parts 9/18/17 Orbital ATK Inc. United States Northrop Grumman Corp. United States Pending 9,171 Arms and Vehicles 1/19/17 Zodiac Aerospace SA France Safran SA France Completed 7,839 Aircraft and Parts 12/17/17 Gemalto NV Netherlands Thales SA France Pending 5,398 1/28/17 Wuchang Shipbuilding Industry Group Co. Ltd. China 2/24/17 DigitalGlobe Inc. United States China Shipbuilding Industry Co. Ltd. MacDonald Dettwiler & Associates Ltd. China Completed 3,549 Arms and Vehicles Canada Completed 2,134 6/13/17 Hyundai Heavy Industries Co. Ltd. South Korea Hyundai Robotics Co. Ltd. South Korea Completed 1,268 Arms and Vehicles 6/28/17 Daewoo Shipbuilding & Marine Engineering Co. Ltd. 4/7/17 Soares Ltd. China South Korea The Export-Import Bank of Korea {KEXIM} China Merchants Industry Holdings Co. Ltd. South Korea Completed 1,127 Arms and Vehicles Hong Kong Completed 1,1 1/27/17 Harris Corp-Government IT Services Business United States Veritas Capital Partners LP United States Completed 69 Raw Materials and Supplies Top 1 A&D deals 216 Announced Target name Target nation Acquirer name Acquirer nation Status Deal value 1 Category 1/23/16 B/E Aerospace Inc. United States Rockwell Collins Inc. United States Completed 8,21 Aircraft and Parts 1/26/16 Lockheed Martin Corp-Government IT & Technical Services Businesses United States Leidos Holdings Inc. United States Completed 5,93 11/14/16 STX Offshore & Shipbuilding Co. Ltd. South Korea Creditors South Korea Pending 3,597 Arms and Vehicles 4/29/16 Jiangsu Guoxin Investment Group Ltd.-Assets China Sainty Marine Corp. Ltd. China Completed 3,188 9/29/16 Safran Identity & Security SAS France Investor Group United States Completed 2,72 Supporting Services 11/29/16 Shenyang Aircraft Industry (Group) Co. Ltd. China Zhonghang Heibao Co. Ltd. China Completed 1,4 Aircraft and Parts 3/18/16 Airbus Group SE-Defence Electronics Business Germany KKR & Co. LP United States Completed 1,244 5/24/16 ILC Holdings Inc. United States TransDigm Group Inc. United States Completed 1, 12/23/16 Daewoo Shipbuilding & Marine Engineering Co. Ltd. South Korea The Export-Import Bank of Korea {KEXIM} Electronic Equipment Electronic Equipment South Korea Pending 83 Arms and Vehicles 7/11/16 Industria de Turbo Propulsores SA Spain Rolls-Royce Holdings PLC United Kingdom Intended 796 Aircraft and Parts ¹ In Million USD PwC Deals Global A&D Deals Insights Q

6 About PwC s Deals Practice Bob Long US Aerospace and Defense Deals leader McLean, Virginia bob.long@pwc.com (73) For a deeper discussion on deal considerations, please contact one of our practice leaders or your local Deals partner: Scott Thompson US Aerospace and Defense leader McLean, Virginia scott.thompson@pwc.com (73) Randy Starr US Aerospace and Defense Advisory leader Florham Park, New Jersey randy.starr@pwc.com (973) Smart deal makers are perceptive enough to see value others have missed, flexible enough to adjust for the unexpected, aggressive enough to win favorable terms in a competitive environment, and circumspect enough to envision the challenges they will face from the moment the contract is signed. But in a business environment where information can quickly overwhelm, the smartest deal makers look to experienced advisors to help them fashion a deal that works. PwC s Deals group can advise aerospace and defense companies and aerospace and defense-focused private equity firms on key M&A decisions, from identifying acquisition or divestiture candidates and performing detailed buy-side diligence, to developing strategies for capturing post-deal profits and exiting a deal through a sale, carve-out, or IPO. With more than 2, deals practitioners worldwide, we can deploy seasoned teams that combine aerospace and defense industry skills with local market knowledge virtually anywhere and everywhere your company operates or executes transactions. Although every deal is unique, most will benefit from the broad experience we bring to delivering strategic M&A advice, due diligence, transaction structuring, M&A tax, merger integration, valuation, and post-deal services. In short, we offer integrated solutions, tailored to your particular deal situation and designed to help you extract peak value within your risk profile. Whether your focus is deploying capital through an acquisition or joint venture, raising capital through an IPO or private placement, or harvesting an investment through the divesture process, we can help. For more information about M&A and related services in the global aerospace and defense industry, please visit or About the data The information presented in this report is an analysis of deals in the global aerospace and defense industry. Deal information was sourced from Thomson Reuters and includes deals for which targets have an SIC code that falls into one of the 14 aerospace and defense industry groups. Certain adjustments have been made to the information to exclude transactions which are not specific to aerospace and defense or incorporate relevant transactions that were omitted from the SIC industry codes. This analysis includes all individual mergers, acquisitions, and divestitures for disclosed or undisclosed values, leveraged buyouts, privatizations, minority stake purchases, and acquisitions of remaining interest announced between January 1, 215 and March 31, 218, with a deal status of completed, partially completed, pending, pending regulatory and pending completion, and excludes all rumors and seeking buyers. Additionally, transactions that are spin-offs through distribution to existing shareholders are included. Percentages and values are rounded to the nearest whole number which may result in minor differences when summing totals. 218 PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details. Disclaimer: This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.