Cubic to consider second acquisition offer

Cubic Corp. now has a competing offer to consider alongside its signed agreement to be acquired by private equity firm Veritas Capital and an activist hedge fund.

Singapore Technologies Engineering has made an unsolicited proposal to acquire Cubic for approximately $2.41 billion in cash at $76 per share, Cubic said Monday.

ST Engineering’s bid is an 8.6-percent premium over the $70-per-share proposal by Veritas and Elliott Investment Management announced and agreed upon in early February.

Cubic has not withdrawn from that agreement nor is the board of directors changing its recommendation that stockholders vote to accept the Veritas-Elliott offer. But Cubic will engage in discussions with ST Engineering as the board of directors believes that bid “is or would reasonably be expected to lead to a superior proposal," the company said.

Veritas and Elliott’s Evergreen Capital private equity arm would pay $2.21 billion in cash and assume approximately $600 million in Cubic debt to acquire the San Diego-headquartered defense and transportation company. Veritas and Elliott could of course return with another offer to try and top that of what ST Engineering has now put in.

Cubic would be subject to a $45.5 million payment if it terminates the agreement with Veritas and Elliott.

ST Engineering’s proposal to buy Cubic has a second piece to it. Upon closure, ST Engineering would then sell the Cubic defense business to private equity firm Blackstone.

Alongside the Veritas-Elliott bid, the other main competing written offer Cubic received in its process of deciding on a sale of the company had that same structure.

That second offer from a “Strategic Party C” was primarily focused on Cubic’s transportation business and would have been subject to a review by the Committee on Foreign Investment in the U.S. A second party would concurrently be in the frame to buy the defense business.

Strategic Party C’s series of offers got as high as $72.00-$75.00 per share in cash.

J.P. Morgan is acting as lead financial adviser to Cubic, while Sidley Austin LLP and Faegre Drinker Biddle & Reath LLP are acting as legal counsel.

Cubic’s stock price was up 9 percent in morning trade Monday and hit a new all-time record shortly after the open.

While Veritas’ effort to buy Cubic awaits further clarity, the private equity firm has found a buyer for one of its other assets in aerospace-and-defense electronics company Abaco Systems..

Ametek said Monday it has agreed to acquire Abaco in an all-cash deal valued at $1.35 billion including debt expected to close in the middle part of this calendar year. Veritas acquired Abaco in 2015 when the business was the embedded technology and systems division of General Electric.