The US space communication systems provider EMS Technologies has said it is reviewing strategic alternatives after receiving enquiries from potential buyers.
The company added that it would also evaluate existing interest and seeks new proposals from…
The US space communication systems provider EMS Technologies has said it is reviewing strategic alternatives after receiving enquiries from potential buyers.
The company added that it would also evaluate existing interest and seeks new proposals from other potential parties.
EMS also said that it was postponing its annual meeting, in order to allow the company and its board, as well as other potentially interested parties, to devote attention to exploring strategic alternatives.
The annual shareholder meeting will now be held on 30 June, instead of 12 May.
The company said: “Given the inquiries we have received, our board believes it is in the best interests of all shareholders to conduct this process prior to holding the annual meeting.”
EMS has hired Bofa Merrill Lynch as financial adviser, while King & Spalding and Kirkland & Ellis are acting as legal advisers.
One of the potential buyers may be communications products developer Comtech Telecommunications, according to Reuters citing a Noble Financial Capital Markets analyst.
The company’s name has been associated with several acquisitions of late. In November last year, Comtech was rumoured to be interested in buying ground control system manufacturer Integral Systems. Other prospective buyers mooted were broadband satellite specialist ViaSat and French defence and electronics company Thales. This report came shortly after Comtech reportedly ended its merger talks with CPI International, a satcoms RF antenna developer, after it was outbid by private equity firm Veritas Capital.
EMS has been under pressure to make changes to its board and consider a sale for several months now.
In early February this year, MMI Investments, a US-based hedge fund which holds a 7.8% stake in EMS, nominated four independent director nominees for election to the EMS board of directors at the 2011 annual meeting of stockholders.
In a statement released at the time, Jerome J. Lande, an MMI Partner and director nominee, said: “Over the last decade, EMS has spent nearly US$150m on acquisitions (roughly half its current market cap), taken asset write-downs of over US$50m and had four different CEOs. During this time, there have been two constants: 1) EMS’ lackluster stock price and financial performance, and 2) Chairman Jack Mowell’s leadership of the board of directors, half of whom spent their careers principally in academia or government. We believe immediate change on the Board is necessary for stockholders to maximize the value of their investment in EMS.”
A few months before that in late September 2010, MMI sent a letter to EMS saying that the company should sell either itself or some of its units, in order to maximise shareholder value.
“We find EMS’ corporate strategy and structure overly-complex and disjointed. Furthermore we are frustrated by EMS’ valuation multiple, which underperforms its peers, and its stock price, which is virtually unchanged in ten years. We have extensively analyzed EMS’ operations, performance, corporate structure and valuation, both individually and relative to its peers, and concluded that for EMS’ fair value to be realized it will require more than a successful operational streamlining. In our view it will take a strategic streamlining as well. Therefore we strongly urge the formation of a special committee of independent directors to pursue all strategic alternatives, including the potential sale of the company in whole or parts, to maximize value for EMS stockholders,” the letter read.
EMS is split into four main units: EMS Defense & Space; EMS Global Tracking; EMS Aviation; and LXE, a manufacturer of rugged vehicle-mounted, handheld and wearable mobile computers.
For the full year 2010, the company reported revenues of US$355.2m, against US$360m in 2009, and net earnings of US$14.1m, compared with US$13.1m the previous year. Adjusted EBITDA for 2010 was US$40.3m, an increase on the US$35.7m posted in 2009.
When EMS announced on 19 April it was considering strategic alternatives, it had a market cap of about US$368.8m.
