Kratos is a specialized National Security technology business providing mission critical products, services and solutions for United States National Security priorities. The Boards of Directors of both companies have unanimously approved the combination. Pursuant to the agreement, Integral Systems stockholders will receive an amount in cash and stock having an aggregate value of approximately $13.00 per share as of the date of the agreement. Specifically, each Integral Systems share will be converted into $5.00 in cash and 0.588 of a share of Kratos common stock. The transaction represents a 63.5 percent premium over Integral Systems’ unaffected closing price of $7.95 per share on July 15, 2010, the business day prior to July 16, 2010, the date on which Vintage Capital Management, LLC filed a 13D announcing the acquisition of 9.9 percent ownership of Integral Systems’ common stock. The transaction represents a premium of 16.6 percent premium over the closing price of Integral Systems’ common stock of $11.15 per share on January 12, 2011, the day before the Company announced that it had hired Stone Key Partners LLP to assist it in its review of strategic alternatives.
The combined company will provide differentiated, integrated technology that addresses the most critical National Security priority areas. Combining the two highly complementary technology and customer portfolios is designed to uniquely position the merged company to bring advanced Command, Control, Communications, Computing, Combat Systems, Intelligence, Surveillance and Reconnaissance (C5ISR) platforms to market. The merger is projected to:
- Accelerate the combined corporation’s addressable market, significantly enhancing presence across the Department of Defense (DoD), Intelligence community and public safety sector
- Create new growth opportunities within markets such as unmanned aerial vehicle (UAV) command and control, satellite-to-ground situational awareness, Radio Frequency (RF) interference mitigation and countermeasure systems
- Augment market opportunities through an expanded global footprint, distribution channels and customer base
- Enable higher margin platforms and integrated solutions through combined product offerings and enhanced systems integration capabilities
Eric DeMarco, Kratos President and Chief Executive Officer said, “Integral Systems brings to Kratos its unique expertise in developing, managing and operating secure satellite and terrestrial communications networks, as well as systems and services to detect, characterize and geolocate sources of RF interference. As space-based assets become even more critical to support our nation’s airborne, naval and ground electronic warfare systems, the combined company will be able to better meet the needs of current and future customers. We are looking forward to working closely with the team at Integral Systems to build the premier technology-based, C5ISR-focused National Security business in the industry.”
Stone Key Partners LLC acted as the exclusive financial advisor and Gibson, Dunn & Crutcher LLP acted as legal advisor to the Company and its Board of Directors in connection with the transaction.
