M&A

Sparton finds a buyer in PE firm Cerberus

Defense electronics maker Sparton Corp. has found a buyer nearly nine months after a previous deal to be acquired was terminated and led the company to restart its almost two-year-long sale process.

Sparton said Wednesday it has agreed to sell itself to private equity firm Cerberus Capital Management for approximately $181.5 million in cash, or $18.50 per share. Both sides expect to close the transaction during the first quarter of next year pending a Sparton shareholder vote, antitrust approvals and other customary closing traditions.

Antitrust concerns are what led to the termination of Sparton’s prior deal on the sale of itself to British defense company Ultra Electronics. In March, Sparton and Ultra called off the transaction on expectations that the U.S. Justice Department would go to court to block the combination.

The U.S. Navy also indicated concerns that a combined Ultra-Sparton would create a consolidated sonobuoy supplier and recommended both companies build up their own capabilities in that domain.

Founded in 1899, Sparton designs and builds electromechanical devices for military and aerospace customers among others. The company has been looking to be acquired for almost two years as part of its examination of strategic alternatives announced at the time.

Earlier this month, Cerberus announced it would acquire a 70-percent ownership stake in the defense business of armored vehicle maker Navistar to support that unit’s growth strategies.

Cerberus also owns defense services contractor DynCorp International.

J.P. Morgan Securities was financial adviser to Cerberus in the Sparton transaction. Lowenstein Sandler LLP, Kirkland & Ellis LLP, and Blank Rome LLP were legal counsel to Cerberus.

Wells Fargo Securities and Raymond James & Associates Inc. were financial advisers to Sparton. Mayer Brown LLP was legal counsel to Sparton.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.

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