DEALTALK-Small U.S. defense firms back on M&A radar
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* Surveillance and intelligence firms in demand
* Large contractors to rely on M&A to sustain growth
* Cuts in major programs may hit big companies
* Valuations seen getting cheaper
By Bijoy Koyitty and Bhaswati Mukhopadhyay
BANGALORE, Feb 1 (Reuters) - Smaller U.S. defense firms are back on the acquisition radar, helped by a renewed interest in surveillance and intelligence -- two key areas that have been attracting federal interest lately.
The sector is expected to see more deals in the near term than it has in the past three years, as large players, grappling with cutbacks in major defense programs, look to sustain growth by buying smaller rivals in niche areas.
"The industry has consolidated considerably in the last 10 to 15 years and it will continue to do so. Most acquisition targets probably will be in the area of smaller firms," said Tian Qiu, an analyst at Templeton Global Equities Group. Continuación...