Acquisition company Global Defense & National Security Systems (NASDAQ: GDEF) has agreed to purchase Reston, Va.-based government contractor STG for approximately $165.5 million in cash and stock, GDEF said Wednesday.
GDEF expects to close the $10.55-per-share transaction in the third quarter of the company’s 2015 fiscal year and the deal is subject to the approval of its shareholders.
The company’s fiscal year runs on a calendar year basis and the company will also seek to extend the deadline for the deal’s closure from July 24 to October 24 in the event that the approval process is not completed, a subsequent GDEF filing with the Securities and Exchange Commission says.
The transaction’s value breaks down to $75 million in cash and $90.5 million in stock from 8.58 million in shares of GDEF, which will issue up to 445, 161 ishares of the combined company to STG stockholders, according to the filing.
STG stockholders will hold the majority of stock in the combined company while Global Strategies Group and the public will own the remaining shares in that entity, the companies said.
GDEF is a Reston-based special purpose acquisition company founded by leaders at Global Strategies Group to acquire businesses that operate in the U.S. defense and national security markets.
SPACs, a type of “blank check company” according to the SEC, can undertake an IPO with the intent to merge with or acquire a company with proceeds of the SPAC’s initial public offering.
GDEF completed an initial public offering in October 2013 with the strategy to build a mid-tier technology and services contractor in the government market.
STG recorded approximately $209.7 million in revenue for its 2014 fiscal year, holds a $412.2 million contract backlog as of March and provides services in cybersecurity, software development and analytics to 50 federal agencies.
Approximately 60 percent of STG’s revenue is in the defense and national security markets and the other 40 percent from federal and civilian agencies, GDEF said in a presentation to investors.
GDEF said the deal was made for the combined entity to pursue acquisition opportunities as well as expand its footprint in the U.S. defense, intelligence and homeland security markets as the White House requested $680 billion in fiscal year 2016 funds for those areas.
Simon Lee, who founded STG in 1986 and serves as CEO, will serve as chairman of the board of directors for the combined company and STG President and Chief Operating Officer Paul Fernandes will lead that entity upon the deal’s closure.