Cerberus Capital Management LP has agreed to acquire Sparton Corporation, a provider of electromechanical devices, for $18.50 per share in cash. The deal is expected to close in the first calendar quarter of 2019. J.P. Morgan Securities LLC acted as financial adviser to Cerberus with Lowenstein Sandler LLP, Kirkland & Ellis LLP and Blank Rome LLP providing legal counsel. And, Wells Fargo Securities LLC and Raymond James & Associates Inc served as financial advisers to Sparton while Mayer Brown LLP acted as legal counsel.
SCHAUMBURG, Ill.–(BUSINESS WIRE)–Sparton Corporation (“Sparton” or the “Company”) (NYSE:SPA) today announced that it has entered into a definitive agreement to be acquired by an affiliate of Cerberus Capital Management, L.P. (“Cerberus”), a global leader in alternative investing. Under the terms of the agreement, Cerberus will acquire all outstanding shares of Sparton’s common stock for $18.50 per share in cash.
The $18.50 per share consideration represents a premium of approximately 41% over Sparton’s closing share price on December 11, 2018. The Sparton Board of Directors has unanimously approved the agreement and recommends that the Company’s shareholders approve the transaction.
“This transaction is the result of the significant time and effort the Company has invested in its previously announced process to explore strategic alternatives, including a potential acquisition of Sparton,” said Joseph J. Hartnett, Interim President and Chief Executive Officer of Sparton. “We are pleased to have successfully concluded our process with a transaction that delivers significant value to the shareholders of Sparton.”
Mr. Hartnett continued, “In addition to delivering immediate value to our shareholders, this transaction provides Sparton with a long-term partner that is focused on building upon our strong platform. Cerberus is recognized as a leading investor in global technology and manufacturing companies that brings significant operational expertise, in addition to its financial capital and acumen. Together, we will be able to capitalize on strategic growth opportunities, while continuing to meet the needs of our customers by delivering high-quality, innovative solutions and services.”
Tarek Ajouz, Managing Director of Cerberus, commented, “Sparton has a proven track record as a leading manufacturer of complex electromechanical devices for leading businesses and government agencies around the world. 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. We look forward to partnering with Sparton’s talented employees to serve its customers with best-in-class solutions, build upon the foundation of excellent capabilities already in place, and help Sparton achieve its full potential for growth.”
The transaction, which is subject to the receipt of Sparton shareholder approval, clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other customary closing conditions, is expected to close in the first calendar quarter of 2019. Additional details regarding the transaction will be set forth in a proxy statement that will be sent by Sparton to its shareholders in advance of the special meeting at which Sparton’s shareholders will be asked to approve the transaction.
Debt financing for the transaction is being provided by accounts managed by TCW Asset Management Company, LLC and MSD Partners, L.P.
J.P. Morgan Securities LLC acted as financial advisor to Cerberus and Lowenstein Sandler LLP, Kirkland & Ellis LLP, and Blank Rome LLP acted as legal counsel to Cerberus.
Wells Fargo Securities, LLC and Raymond James & Associates, Inc. acted as financial advisors to Sparton. Mayer Brown LLP acted as legal counsel to Sparton.
About Sparton Corporation
Sparton Corporation (NYSE:SPA), now in its 119th year, is a provider of complex and sophisticated electromechanical devices with capabilities that include concept development, industrial design, design and manufacturing engineering, production, distribution, field service, and refurbishment. The primary markets served are Medical & Biotechnology, Military & Aerospace, and Industrial & Commercial. Headquartered in Schaumburg, IL, Sparton currently has thirteen manufacturing locations and engineering design centers worldwide. Sparton’s Web site may be accessed at http://www.sparton.com/.
Founded in 1992, Cerberus is a global leader in alternative investing with over $35 billion in assets across complementary credit, private equity, and real estate strategies. We invest across the capital structure where our integrated investment platforms and proprietary operating capabilities create an edge to improve performance and drive long-term value. Our tenured teams have experience working collaboratively across asset classes, sectors, and geographies to seek strong risk-adjusted returns for our investors. For more information about our people and platforms, visit us at www.cerberus.com.