As described in a press release, TransDigm will pay $7.75 cash for each outstanding share of Aerosonic, a 60% premium over the shares' closing price Friday. TransDigm intends to launch a tender offer for Aerosonic shares on or before May 9. Aerosonic will have the right to "go shop" for a better offer for 40 days, but finding none, would proceed to merge into TransDigm.
Aerosonic is profitable, and TransDigm's offer price, at 1.25 times Aerosonic's annual revenue, implies a steep discount to TransDigm's own valuation of 4.25 times sales.
Aerosonic designs highly engineered, proprietary air data sensing, test and display components for use primarily in the business jet, helicopter and military markets, including both the U.S. military and Boeing. Approximately 55% of the company's business is commercial, and about 60% is aftermarket (as opposed to sales to original equipment manufacturers such as Boeing).
Aerosonic shares leapt 60% in response to Monday's news, closing at precisely the $7.75 offer price. (They are at $7.73 as of publication of this article.) TransDigm's shares gained as well, up 0.5% to close Monday at $146.16.
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