Wireless communications company
Aeroflex Holding Corp.
) has inked a definitive merger agreement worth $920 million with
Cobham plc, a British defense specialist. With an enterprise value
of around $1.46 billion, the transaction is expected to close in
the third quarter of 2014, subject to customary shareholder and
regulatory approvals. Cobham will also assume around $540 million
of Aeroflex's net debt.
Following the announcement of the proposed merger, shares of
Aeroflex scaled a new 52-week high of $10.47 in intraday trading
amid huge volumes. The stock price closed marginally lower at
$10.42, posting an increase of 25.4% in the session.
Per the agreement, U.K.-based Cobham will pay $10.50 for each share
of Aeroflex, representing a 26.1% premium over Aeroflex's closing
share price on May 19, 2014, the trading day prior to the
announcement of the merger.
Cobham has already received the consent of financial investors like
Veritas Capital Partners LLP, Golden Gate Private Equity Inc. and
GS Direct LLC, the investment banking arm of
The Goldman Sachs Group, Inc.
) who holds 76.3% of Aeroflex's shares. The board of directors at
Aeroflex is suggesting shareholders to approve the merger.
Aeroflex and Cobham seem to be a natural fit as they broadly
operate in complementary segments of similar markets. Aeroflex
manufactures components used in defense, aerospace, manufacturing
and mobile and broadband communications. About 70% of its revenues
are generated from commercial customers, while the balance is
accounted for by defense and security. Cobham operates as a leading
British aerospace and defense supplier, with the U.S. defense
generating over a third of its sales.
Aeroflex expects the merger to unlock immediate, deep value for its
shareholders as the company is likely to capitalize on Cobham's
bigger scale of operations and extensive market presence. The deal
holds the potential to broaden Aeroflex's clientele and give it
access to the combined entity's wide resource pool.
For Cobham, the transaction marks its biggest deal ever and will
enable it to venture into fast-growing U.S. commercial markets
including microelectronics and wireless civil communications.
A number of law firms including Rosen Law Firm, P.A., Levi &
Korsinsky, Harwood Feffer LLP and Kirby McInerney LLP have begun
investigating potential claims against Aeroflex concerning the
The firms will inspect whether the board is fulfilling its
fiduciary responsibilities toward its shareholders by maximizing
company value and obtaining full and fair consideration for their
stake in the company.
Aeroflex currently holds a Zacks Rank #3 (Hold). Other stocks in
the industry that look promising and are worth a look include
Applied Micro Circuits Corporation
), each sporting a Zacks Rank #1 (Strong Buy).
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