24 Oct 02. DRS Technologies Inc. (NYSE:DRS – News) signed a definitive agreement to buy Paravant Inc. (NasdaqNM:PVAT – News) for about $4.75 a share, a 24.2% premium based on Paravant’s closing price Wednesday of $3.60.
In a press release today, DRS said the total consideration for the deal is about $92m, and the company will assume about $13m in Paravant’s debt.
As part of the cash tender offer, certain Paravant shareholders who own 22% of the outstanding stock have agreed to tender their shares. The tender offer is expected to begin in the next week, with the deal closing in DRS’ fiscal third quarter.
In June this year Paravant Inc. reported financial results for its quarter ended March 31, 2002. Revenues increased by 35%, from $11,293,216 to $15,238,106 for the quarters ended March 31, 2001 and 2002 respectively. As of March 31, 2002 the Company’s backlog was at a record high of $53.1m, consisting of $46.6m in firm fixed-price purchase orders, and $6.2m in IDIQ contracts. The contracts in the backlog are expected to generate profits within the Company’s historical levels.
DRS, with $517.2m in sales for the year ended March 31, expects the deal to add about $80m in sales in the first full year and be immediately accretive to earnings.
Comment: this is good news for DRS and Paravant (See Paravant wins BOWMAN contract). We reported on both companies in our recent C4ISTAR Technologies issues and it had become apparent with Paravant’s first BOWMAN win that the company had aspirations to expand sales to international customers. DRS had expanded in the UK with the purchase of European Data Systems and Lynwood but failed to win the lucrative BOWMAN contract which initially was expected to go to Litton, a partner with GD in the BOWMAN bidding process. DRS has established a sound business in rugged computers in the US and this buy will give the company and Paravant a strong base in the UK to create a manufacturing base for the BOWMAN computers and boost international sales particularly in the UK where DRS is believed to be eyeing markets past BOWMAN, that is Watchkeeper and FRES.