According to a BB&T survey of the top 30 publicly traded companies in the government market, Boeing Co. and Lockheed Martin Corp. to continue to be active acquirers, with the two companies sitting on more than $7 billion in cash. Overall, the 30 companies on the list have about $27 billion in cash.
Scott Hommer, co-chairman of the Government Contractor Services Group at Venable, provided a dissenting opinion, saying he doesn’t expect M&A activity to improve until perhaps the second half of 2009, when the Obama administration’s top priorities – or flagpole programs – become apparent at each government agency. “Then you’ll see the contractors try to get close to the flagpole,” he said.
However, he added, “If we get to [the third quarter] and there hasn’t been movement toward a recovery, I’m not sure the government continuing to spend [Troubled Assets Relief Program] dollars is going to help so much. We’ll just be at the mercy of the market forces at that point.”