Microsemi Corp. announced that it has entered into a definitive agreement to acquire White Electronic Designs Corp. through a cash tender offer at $7.00 per share for a net transaction value of approximately $100 million, net of White Electronic’s projected cash balance at closing.
White Electronic is a leader in design, assembly, and test integration. They have extensive offerings and experience in Multi-Chip-On-Board solutions that are integrated into Defense and Aerospace applications. Their technology integrates surface mount technologies, microelectronics, and Anti Tamper technologies into one solution. Their market focus is where size, weight, and performance create a market advantage. A significant area of market expansion where they have developed unique technology is in the Anti Tamper market. This market is expanding rapidly as every major weapon system now requires this feature.
Anti Tamper technology enables key product offerings in the GPS receiver market for munitions programs such as the accelerated precision mortar initiative (APMI) and the Precision Guided Kit (PGK). These programs meet the urgent operational requirements of the U.S. military in Afghanistan that have highlighted the importance of pinpointing targets using GPS precision-guided munitions. GPS-enabled precision dramatically reduces the 136 meters circular error probable (CEP) of conventional mortars to about 10 meters. Improving the accuracy of mortars and other battery munitions is an important growth opportunity, not only because it reduces unfortunate collateral damage but it also greatly decreases wasteful spending on ordinances which land off target.
"The combination of Microsemi’s and White Electronic’s product portfolios further extends Microsemi’s integrated solution offering in the Defense and Aerospace markets with superior technology and capability," said James J. Peterson, President and Chief Executive Officer of Microsemi Corp.. "White Electronic’s chip level hardware solutions delay or obfuscate chip level attacks and mitigate reverse engineering and IP theft. This Anti Tamper capability is greatly needed today in protecting DoD-critical technologies, and especially helpful in enabling foreign military sales."
"The acquisition of White Electronic by Microsemi is designed to deliver excellent value to our shareholders while providing an enhanced platform from which our customers can benefit," said Brian R. Kahn, White Electronic’s Chairman. "As such, our board of directors unanimously approved this transaction."
Under the terms of the agreement, Microsemi will commence a cash tender offer to acquire White Electronic’s outstanding shares of common stock at $7.00 per share, net to each holder in cash. Upon satisfaction of the conditions to the tender offer and after such time as all shares tendered in the tender offer are accepted for payment, the agreement provides for the parties to effect, subject to customary closing conditions, a merger to be completed following completion of the tender offer which would result in all shares not tendered in the tender offer being converted into the right to receive $7.00 per share in cash. The transaction is subject to customary closing conditions, including the tender of a majority of the outstanding shares of White Electronic’s common stock on a modified fully diluted basis and regulatory approvals, and is expected to close in Microsemi’s fiscal third quarter, ended June 27, 2010. No approval of the shareholders of Microsemi is required in connection with the proposed transaction. Terms of the agreement were unanimously approved by the boards of directors of both Microsemi and White Electronic.
Microsemi will finance the acquisition using its cash on hand and there will be no acquisition debt incurred in connection with the transaction.
Microsemi expects that there will be significant cost synergies from the transaction and that Microsemi can drive gross profit levels to its own corporate target as Microsemi exits lower margin business, drives a richer product mix, and realizes operational and other cost synergies by Microsemi’s fourth fiscal quarter, ended October 3, 2010. Based on current assumptions, Microsemi further expects the acquisition to be $0.08 to $0.12 accretive in its full fiscal year 2011.