Kratos Defense & Security Solutions Inc is to buy rival Integral Systems Inc for $225 million in cash and stock to expand into the satellite signal monitoring segment .
Kratos said it would acquire each Integral Systems stock for $5 a share in cash and 0.588 shares of Kratos common stock. The offer price, valued at $12.65 a share, represents about 3 percent discount to Integral Systems’ Friday closing price of $13.01.
Kratos shares were down 2.5 percent at $12.68 in morning trade on Monday, potentially reducing the deal value. Integral Systems shares also fell 5.5 percent to $12.29 in morning trade.
Maryland-based Integral Systems provides controls for military ground systems and satellites. Its important markets include cyber security, intelligence, communications and unmanned aerial systems, which are expected to see higher demand as the Pentagon shifts its spending focus to such technologies.
Kratos, with a market capitalization of $311 million, provides security and surveillance services to U.S. government agencies.
The transaction is expected to add to Kratos’ earnings per share, margins and cash flow, excluding transaction-related and financing costs, with expected revenues of $175 million, the company said in a statement.
Source: Reuters