US defence contractor Raytheon is set to acquire secure communications provider Applied Signal Technology (AST) for approximately US$490m in cash.
The acquisition, which represents US$38 a share and has been recommended by the boards of both companies,…
US defence contractor Raytheon is set to acquire secure communications provider Applied Signal Technology (AST) for approximately US$490m in cash.
The acquisition, which represents US$38 a share and has been recommended by the boards of both companies, is expected to close in Q1 2011.
This price represented a premium of 37% to AST’s closing value of US$27.73 on October 21, the day before AST announced that it had hire BoA Merrill Lynch to explore strategic alternatives for the company.
Raytheon’s tender offer for AST is due to expire on January 28, 2011. The company requires at least 76.3% of AST’s shareholders to agree to sell their holdings.
According to Raytheon, the combination of its radar and sensor products with AST’s communications and signals technologies will support the enlarged group’s aim to deliver next-generation intelligence, surveillance and reconnaissance (ISR) solutions.
“This combination of strengths, along with our complementary cultures of innovation, will provide capabilities to address our customers’ current and future challenges while creating value for our shareholders,” said William Swanson, Raytheon’s chairman and CEO.
Almost 90% of AST’s sales are to classified customers, and its portfolio of services range from secure broadband network communications to electronic warfare solutions.
William Van Vleet, AST’s CEO, said: “Our history of innovation across a range of strategic and tactical ISR products and services, including significant scale in the fast-growing network intelligence space, together with Raytheon’s technology portfolio and development expertise will create strong new capabilities for customers.” Following completion of the transaction, AST will be integrated into Raytheon’s Space and Airborne Systems (SAS) business.
DLA Piper provided AST with legal advice, while Hunton & Williams was counsel to Raytheon.
In related news, Raytheon has urged its shareholders to reject an unsolicited “mini-tender offer” by TRC Capital to acquire 0.5% of its outstanding stock at US$43 a share.
“Mini-tender offers are designed to seek to acquire less than 5% of a company’s outstanding shares, thereby avoiding many disclosure and procedural requirements of the Securities and Exchange Commission (SEC) that apply to offers for more than 5% of a company’s outstanding shares,” the company warned in a statement published on 22 December.
TRC’s offer for up to two million shares represented an approximate 4.4% discount to the US$44.96 value of Raytheon’s stock on 20 December, the day prior to the date the offer commenced.
The statement added that TRC’s share offer “is not in any way related to, and will have no impact on, Raytheon’s proposed acquisition” of AST.
