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Parsippany, NJ, August 18, 2003. DRS Technologies and Integrated Defense Technologies. announced that they have signed a definitive agreement, which provides for the merger of IDT with a wholly-owned subsidiary of DRS Technologies. As a result of the merger, DRS will acquire all of the outstanding stock of IDT for $17.50 per share in cash and DRS common stock.
Each share of IDT common stock will be converted in the merger into the right to receive a combination of $12.25 in cash and 0.1875 of a share of DRS common stock. The collar provides that if DRS's average common stock closing price prior to the closing of the transaction decreases below $28.00 per share, the exchange ratio will increase proportionally, provided that the exchange ratio will not increase above 0.2027 of a share of DRS common stock.
The cash portion of the acquisition, together with the debt of IDT to be refinanced, will aggregate approximately $437 million at closing. Total consideration for the acquisition, including an estimated $175 million of IDT's net debt to be refinanced at closing, is approximately $550 million, representing a multiple of 1.5x the revenues and 8.5x the EBITDA (earnings before interest, taxes, depreciation and amortization) expected to be contributed by IDT during DRS's next full fiscal year ending March 31, 2005. The transaction is expected to close by the end of this year, and is subject to customary regulatory approvals and other closing conditions, including approval by a majority of IDT's stockholders at a special meeting.
DRS expects to provide the cash to acquire IDT by utilizing existing excess cash on hand, additional bank borrowings and through the issuance of debt securities. Wachovia Securities is serving as financial advisor to DRS on the transaction. Bear, Stearns & Co. Inc. is serving as financial advisor to IDT on the transaction. Bear, Stearns & Co. Inc. has further provided to DRS committed financing necessary to consummate the acquisition.
DRS also entered into a voting agreement with Veritas Capital Management, LLC (Veritas), a New York-based investment management firm, and certain of its affiliates, which beneficially own 55 percent of IDT's outstanding shares. Subject to certain conditions, the Veritas entities have agreed to vote in favor of the merger at the special meeting of IDT's stockholders and have sufficient shares to approve the merger at the special meeting.
Mark S. Newman, DRS Technologies' chairman, president and chief executive officer, commented, "IDT and DRS are two of the largest, pure-play defense electronics suppliers in the world, and the combination will firmly establish DRS Technologies as the leading mid-tier defense technology company with an approximate run rate of $1.2 billion in annual revenues. This transaction will be a major milestone in our growth, strengthening our strategic position and diversifying our business mix, while enhancing our content on key programs."
Robert B. McKeon, IDT's chairman, who will be joining the DRS board of directors upon the closing of the transaction, remarked, "DRS Technologies is a well-established, well-regarded presence in defense electronics, and the combination with IDT will create a formidable, mid-tier industry competitor. I look forward with great anticipation to contributing to DRS's board and to the exciting growth opportunities I believe this combination offers to DRS's investors, customers and employees."
The combination will create the industry's leading mid-tier defense technology company;
IDT will contribute an extensive, diversified product base, expanded customer relationships and a broad array of profitable, currently fielded programs to DRS's portfolio. No one product or program of the combined company will account for more than approximately 6 percent of revenues;
---I DT will provide increased content on key Army and Navy weapons programs, and significantly expand DRS's intelligence agency business;
---IDT will provide key program additions in power technologies, including a market position on a U.S. Army hybrid electric drive program, as well as a position in power distribution switchgear for the LHD-8 Amphibious Assault Ship under development at Northrop Grumman (NYSE: NOC - News) Ship Systems, which complement DRS's strong presence in the Naval power systems business;
---IDT will contribute a significant new base of U.S. Air Force programs, including the recently awarded P5 Combat Training System contract with a ten-year cumulative value estimated at $367 million. Approximately 20 percent of IDT's fiscal 2002 revenues were derived from Air Force programs; and
--- IDT will be immediately accretive to earnings and cash flow.
Integrated Defense Technologies, headquartered in Huntsville, Alabama, is a leading developer and provider of mission-critical, advanced electronics and technology products for the defense and intelligence industries. Its systems, subsystems and components are sold to all branches of the U.S. armed services, various government agencies, major prime defense contractors and international governments. IDT is organized into three business segments: Electronic Combat Systems, Diagnostics and Power Systems, and Communications and Surveillance Systems. IDT employs over 2,100 people.
DRS Technologies provides leading edge products and services to government and commercial customers worldwide. Focused on defense electronics, DRS develops and manufactures a broad range of mission critical systems and components in the areas of communications, combat systems, battlefield digitization, electro-optics, power systems, data storage, digital imaging, flight safety and space.
For more information about DRS Technologies, visit www.drs.com.
For more information about IDT, visit www.integrateddefense.com .
Military & Aerospace Electronics
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