Cubic accepts increased bid from Veritas & activist hedge fund

Cubic Corp.’s board of directors accepts an increased offer from Veritas Capital and the latter's activist hedge fund partner for this deal that ends a bidding war against Singapore Technologies Engineering.

Cubic Corp.’s board of directors has agreed to an increased offer from private equity firm Veritas Capital and activist hedge fund Elliott Management that ends a bidding war for the former.

Veritas and Elliott’s own private equity arm Evergreen Coast Capital will now acquire Cubic for approximately $2.38 billion in cash, or $75 per share.

That new agreement announced Wednesday represents an approximately 7.7-percent increase from the original Veritas-Elliott bid Cubic accepted in February at $2.21 billion in cash, or $70 per share.

San Diego-headquartered Cubic is also ending further engagement with its other suitor in Singapore Technologies Engineering, which has sought to top the Veritas-Elliott bid with at least two unsolicited bids within the past two weeks.

ST Engineering’s most recent offer was $2.47 billion in cash, or $78 per share. Despite that increased valuation, Cubic’s board sees the Veritas-Elliott bid as giving more certainty on the timing of closing and any needed regulatory approvals.

The approval process was a main sticking point all along in ST Engineering’s pursuit given that it is half-owned by an investment arm of Singapore’s national government. Any deal between Cubic and ST Engineering would have to go through a review by the Committee on Foreign Investment in the U.S.

For its part, ST Engineering's plan would have it immediately upon closure selling the Cubic defense business to a unit of global investment firm Blackstone in order to increase the odds of getting a CFIUS approval.

ST Engineering’s bid for Cubic primarily concentrated on the transportation business for STE to push further in its smart city strategy.

"This offer demonstrated our steadfast focus in seeking opportunities for sustainable global growth, and we will continue to maintain a disciplined approach as we pursue our strategic objectives,” said ST Engineering CEO Vincent Chong said in a release.

A Cubic stockholder vote is scheduled for April 27 to consider the offer for the company, which has been publicly-traded since 1959.

This represents the second acquisition of a public company Veritas and the Paul Singer-led Elliott fund have partnered on. They worked together to acquire Athenahealth in 2019.