December 6, 2012
In an SEC filing and press release Thursday, LMI Aerospace (Nasdaq: LMIA ) announced that it has agreed to purchase privately held Valent Aerostructures, a provider of complex, structural components, major sub-assemblies and machined parts for OEM and Tier 1 airframe manufacturers in the aerospace and defense industries.
Initial consideration for the deal will be approximately $237 million, less retained indebtedness of approximately $12.6 million. In addition, if Valent hits certain financial goals over the coming years, LMI could pay an additional amount of up to $40 million in "earn out."
Payment will be in the form of LMI common shares and cash, with the likely outcome, absent a steep fall in the stock price of LMI, being $15 million worth of shares, and the balance in cash.
The deal is subject to customary closing conditions, including regulatory approval. Royal Bank of Canada (NYSE: RY ) has agreed to provide up to $300 million in financing to fund the transaction, which will be essential to the deal. LMI currently has only a little over $100,000 in the bank. LMI and Valent are based in Missouri.