Ault Incorporated has signed a definitive merger agreement with SL Industries, Inc. Under the terms of the agreement, a wholly owned subsidiary of SL Industries will commence a cash tender offer to acquire all of Ault's outstanding shares of common stock. Upon completion of the tender offer, SL Industries will effect a merger between this subsidiary and Ault in which the remaining Ault shareholders will receive $2.90 per share in cash. In addition, SL Industries will cash out Ault stock options with an exercise price of less than $2.90 per share and all other outstanding options will be canceled. Following the merger, Ault will become a wholly owned subsidiary of SL Industries.
The Board of Directors of Ault has unanimously approved the acquisition and has voted to recommend that Ault's shareholders accept the tender offer and tender their Ault shares. In addition, the Company's financial advisor, Stephens, Inc., provided a fairness opinion to the Board that the terms of the transaction were fair to Ault's shareholders from a financial point of view.
The consummation of the transaction is subject to certain conditions; including the valid tender of at least a majority of the outstanding shares of common stock of Ault, excluding any shares held by SL Industries.
"We are pleased to announce this strategic combination with SL Industries," commented Frederick M. Green, Ault's President and Chief Executive Officer. "We believe the agreement is a sound one for our employees, customers and shareholders. Our employees will benefit by becoming part of an organization that has a larger financial base and is a leader in the power supply industry. Our customers will benefit from the added resources in the areas of purchasing, logistical support and engineering expertise. This translates into greater scale, increased competitiveness in our target market segments and improved profitability. And, our shareholders have the opportunity to be paid a fair price for their shares that reflects a substantial premium over the current market price."
In addition to announcing the agreement with SL Industries, Ault reported that it is restating its financial results for the first quarter of fiscal year 2006 and its full fiscal years of 2005 and 2004 based on findings during a continuing evaluation and remediation of financial controls at its China manufacturing operations, Ault Xianghe.
As a result of the restatement, the previously reported loss for the first fiscal 2006 quarter increased from $(458,000) to $(803,480), the previously reported loss for fiscal 2005 increased from $(5,129,997) to $(5,472,302) and the previously reported loss for fiscal 2004 increased from $(5,545,646) to $(5,793,646).
The increase in the previously reported losses is due to increasing the Company's cost of goods sold for the first quarter ended August 28, 2005 by $345,480 and for the fiscal years of 2005 and 2004 by $342,385 and $248,000, respectively. Increasing cost of goods sold for each period was required due to accounting errors in accruals for payables due to certain vendors of Ault Xianghe.
