OSI Systems Enters into Definitive Agreement to Acquire American Science and Engineering
Acquisition enhances OSI Systems' security platform with leading
backscatter X-ray inspection technology and services for critical
security end markets.
Expected to be accretive to fiscal year 2017 non-GAAP diluted
earnings per share excluding one-time transaction expenses and
integration costs; at least 10% accretive to fiscal year 2018 GAAP
diluted earnings per share.
HAWTHORNE, Calif.--(BUSINESS WIRE)--
OSI Systems, Inc. (NASDAQ: OSIS) today announced that it has signed a
definitive agreement to acquire American Science and Engineering, Inc.
("AS&E") (NASDAQ: ASEI), a leading provider of detection solutions for
advanced cargo, parcel, and personnel inspection, for $37.00 per share
in cash, representing a total purchase price of approximately $187
million, net of $82 million of AS&E cash and cash equivalents as of
March 31, 2016. The transaction has been unanimously approved by the OSI
Systems and AS&E Boards of Directors. The closing of the transaction,
anticipated during OSI Systems' fiscal second quarter ending December
31, 2016, is subject to the approval of AS&E's shareholders, antitrust
approval, and other customary closing conditions.
Deepak Chopra, OSI Systems' Chairman and Chief Executive Officer, said,
"The acquisition of AS&E will be the most significant security
acquisition in our Company's history and we believe represents an
excellent strategic fit consistent with our expansion strategy. AS&E's
backscatter X-ray technology has long been a leader within the security
industry, and its cutting-edge products, extensive service network, and
premier customer base are highly complementary to our current
operations. We look forward to welcoming AS&E's talented team to OSI
"We are very pleased to join OSI Systems," said Chuck Dougherty,
President and Chief Executive Officer of AS&E. "The capabilities of our
respective organizations are extremely well-matched. We expect our
customers and employees to benefit substantially from the combination of
our technology-driven businesses."
The transaction is expected to result in at least $18 million of annual
pre-tax cost synergies within the first two years post-closing. These
synergies include the benefits of optimizing global business development
and administration, manufacturing and supply chain infrastructure, as
well as the elimination of redundant public company costs. The
transaction is expected to be accretive to OSI Systems' fiscal year 2017
non-GAAP diluted earnings per share excluding one-time transaction
expenses and integration costs and at least 10% accretive to OSI
Systems' fiscal year 2018 GAAP diluted earnings per share.
OSI Systems expects to fund the acquisition with a combination of
balance sheet cash and borrowings from its existing $450 million credit
facility. Pro forma for the acquisition, OSI Systems is anticipated to
have a leverage ratio of 2.1x trailing 12 months pro forma adjusted
EBITDA as of March 31, 2016, excluding anticipated annual cost
synergies. OSI Systems expects continued strong cash flow generation
from the combined business.
"The acquisition of AS&E represents a strategic deployment of capital to
generate additional shareholder value," said Alan Edrick, OSI Systems'
Executive Vice President and Chief Financial Officer. "The combination
creates new opportunities for revenue and profit growth while
maintaining a flexible and conservative balance sheet."
The acquisition of AS&E is consistent with OSI Systems' strategy to
expand its security offerings, enhance its product development
capabilities, and grow in attractive end markets and geographies. AS&E's
track record of innovation, including its Z Backscatter®
X-ray technology, established its position in the global cargo and
vehicle inspection market. Furthermore, its significant installed base
and related service offerings provide a stable, highly profitable base
of business accounting for approximately half of its annual revenue.
Once combined, the businesses will offer comprehensive, best-in-class
technologies driven by a common focus on continued innovation. This
unique portfolio, supported with a worldwide sales and service presence,
and the significant anticipated cost synergies are expected to provide a
foundation for accelerated growth in revenues and profits.
OSI Systems' financial advisors are Citigroup and Roth Capital and
outside legal counsel are Latham & Watkins and Crowell & Moring.
Non-GAAP Financial Measures; Non-GAAP Figures
This press release includes references to adjusted EBITDA and non-GAAP
diluted earnings per share, both of which are non-GAAP financial
measures. Adjusted EBITDA is defined as net income, plus net interest
and other expense, provision for income taxes, and depreciation and
amortization, as further adjusted to eliminate the impact of stock-based
compensation, and impairment, restructuring and other charges. Not all
companies use identical calculations and, accordingly, OSI Systems'
calculation of adjusted EBITDA may not be comparable to similarly titled
measures of other companies. Adjusted EBITDA is not a recognized term
under accounting principles generally accepted in the United States
(GAAP) and does not purport to be a substitute for net income as an
indicator of operating performance or cash flows from operating
activities as a measure of liquidity. OSI Systems uses adjusted EBITDA
to evaluate the effectiveness of OSI Systems' business strategies and
because OSI Systems' credit agreement uses measures similar to adjusted
EBITDA to measure compliance with certain covenants. Non-GAAP diluted
earnings per share excludes the impact of impairment, restructuring and
other charges, net of tax.
OSI Systems believes that the inclusion of non-GAAP diluted earnings per
share figures and adjusted EBITDA provides additional insight into the
operations of OSI Systems. Non-GAAP financial measures should not be
considered in isolation or as a substitute for measures of financial
performance prepared in accordance with GAAP. OSI Systems also believes
that these non-GAAP financial measures provide meaningful supplemental
information because they exclude amounts that it does not view as
reflective of ongoing operating results when planning and forecasting
and when assessing the performance of OSI Systems' business.
Conference Call Information
OSI Systems will host a conference call at 7:00am Pacific Time on June
21, 2016 to discuss the acquisition, which will be followed by a
question-and-answer session. A copy of the presentation slides will be
available on OSI Systems' website, www.osi-systems.com.
To listen, please visit the investor relations section of the OSI
Systems website, www.osi-systems.com,
and follow the link that will be posted on the front page. A replay of
the webcast will be available shortly after the conclusion of the
conference call. The replay can either be accessed through OSI Systems'
or via telephonic replay by calling 1-855-859-2056 and entering the
conference call identification number ‘38194327' when prompted for the
About OSI Systems, Inc.
OSI Systems, Inc. is a vertically integrated designer and manufacturer
of specialized electronic systems and components for critical
applications in the homeland security, healthcare, defense and aerospace
industries. It combines more than 30 years of electronics engineering
and manufacturing experience with offices and production facilities in
more than a dozen countries to implement a strategy of expansion into
selective end product markets. For more information on OSI Systems, Inc.
or any of its subsidiary companies, visit www.osi-systems.com.
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Certain statements made herein are "forward-looking statements"
intended to qualify for the safe harbor from liability established by
the Private Securities Litigation Reform Act of 1995. All statements
other than historical facts included in this press release, including,
but not limited to, statements regarding the timing and the closing of
the transaction, the financing for the transaction, the expected
benefits of the transaction, prospective performance and future business
plans, and any assumptions underlying any of the foregoing, are
forward-looking statements. These statements are based on current
expectations and projections of future events and reflect beliefs and
assumptions that are based on OSI Systems' perception of historical
trends, current conditions and expected future developments as well as
other factors management believes are appropriate in the circumstances.
If underlying assumptions prove inaccurate or unknown, or unknown risks
or uncertainties materialize, actual results could vary materially from
the parties' expectations and projections. Risks and uncertainties
include, among other things, uncertainties regarding the timing of the
closing of the transaction; uncertainties as to how many of AS&E's
shareholders will vote in favor of the transaction; the possibility that
various closing conditions to the merger and related transactions may
not be satisfied or waived, including that a governmental entity may
prohibit, delay, or refuse to grant approval for the consummation of the
transaction; that there is a material adverse change to AS&E's business;
the outcome of any legal proceedings that may be instituted with respect
to the transaction; that the integration of AS&E's business into OSI
Systems is not as successful as expected; the failure to realize
anticipated synergies and cost-savings; the failure of OSI Systems to
achieve the expected financial and commercial results from the
transaction; other business effects, including effects of industry,
economic or political conditions outside either company's control;
transaction costs; actual or contingent liabilities; as well as other
cautionary statements contained elsewhere herein and in the reports
filed by OSI Systems with the Securities and Exchange Commission,
including OSI Systems' annual report for the year ended June 30, 2015
and subsequent quarterly reports. These forward-looking statements
reflect OSI Systems' expectations and projections as of the date of this
press release. OSI Systems undertakes no obligation to update the
information provided herein to reflect any change in OSI Systems'
expectations or projections with regard thereto or any change in events,
conditions or circumstances on which any such information is based.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160621005618/en/
OSI Systems, Inc.
Source: OSI Systems, Inc.
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