The private equity firm Cerberus Capital Management on Wednesday said it has agreed to acquire Sparton Corp. [SPA], a provider of components for the medical and biotechnology, military and aerospace, and industrial markets, for $18.50 per share in cash.
The purchase price represents a 41 percent premium to Illinois-based Sparton’s closing share price on Dec. 11. The deal has been approved by Sparton’s board but still needs approvals by shareholders and regulators. Sparton expects the transaction to close in the first quarter of 2019.
Sparton makes complex electromechanical assemblies for its customers and its products include sonobuoys and related maritime defense technologies, inertial sensors, ruggedized displays and rugged computers.
Sparton had $375 million in sales last year.
“Sparton has a proven track record as a leading manufacturer of complex electromechanical devices for leading businesses and government agencies around the world,” Tarek Ajouz, managing director of Cerberus, said in a statement. “With its industry-leading solutions and strong customer relationships, we believe there is significant opportunity to further expand the company’s leadership position in its markets.”
Sparton’s interim President and CEO Joseph Hartnett said the pending acquisition will give his company a “long-term partner that is focused on building our strong platform.”
Sparton has been reviewing its strategic alternatives. Earlier this year, a deal for it to be acquired by Britain’s Ultra Electronics Holdings for $23.50 per share in cash fell through after the U.S. Department of Justice said it recommended against the merger. The U.S. Navy was concerned that the acquisition would eliminate competition for sonobuoys and would like Sparton and Ultra to begin to wind down their joint venture for the systems in favor of independently developing and producing sonobuoys.
Sparton’s financial advisers on the deal are Wells Fargo Securities and Raymond James & Associates, and Cerberus is being advised by J.P. Morgan Securities.
Earlier in December, Cerberus said it has agreed to acquire a majority stake in the defense business of Navistar International [NAV].