ST Engineering said today it has submitted a proposal to acquire Cubic for $76 per share in cash, countering a previous offer from private-equity firms.
In its announcement, ST Engineering said its proposed deal “represents a premium of 8.6% compared to the US$70 per share in cash agreed to by Cubic with an affiliate of Veritas Capital and Evergreen Coast Capital Corporation which was announced on 8 February 2021.”
“ST Engineering is confident that its Proposed Transaction represents a superior proposal to the Veritas/Evergreen transaction,” the company said.
ST Engineering added that it sees Cubic’s transportation systems business as “an excellent fit with ST Engineering’s strategy to pursue growth in the Smart City domain, including mobility and transportation systems.”
Under the proposed deal, the Cubic transportation systems business would become the global headquarters of ST Engineering’s smart mobility business.
“ST Engineering intends to invest in CTS and retain the ‘Cubic’ brand,” the company said. “We will further strengthen Cubic’s leading position in digital mobility payments and smart mobility applications by combining the best technology and talent from both organisations.”
In its announcement, Cubic today confirmed it received the unsolicited proposal.
“The STE Proposal contemplates that, immediately following the acquisition of all of Cubic’s outstanding stock, STE would sell Cubic’s [mission and performance solutions] business to an affiliate of Blackstone Tactical Opportunities,” the company writes.
“The Veritas Merger Agreement remains in full force and effect, and the Board of Directors of Cubic has not withdrawn or modified its recommendation that the stockholders of Cubic vote in favor of the approval of the merger, the Veritas Merger Agreement and the transactions contemplated thereby,” the company added. “However, Cubic’s Board of Directors has determined that the STE Proposal is or would reasonably be expected to lead to a superior proposal.”
As a result, the board “has determined to engage in discussions with ST Engineering to further evaluate the merits and risks of the proposed transaction relative to the pending transaction with Veritas and Evergreen, including the value offered to our shareholders, the expected completion timing of each transaction, and the regulatory and closing risks associated with each transaction.”