Sparton, Ultra Electronics Terminate Merger Deal - Quick Facts

(RTTNews) - Sparton Corp. (SPA) said that the company and Ultra Electronics Holdings plc (ULE.L) have terminated their July 7, 2017 merger agreement.

In July 2017, Ultra Electronics said it has entered into a conditional merger agreement to acquire Sparton for $23.50 per Sparton share in cash, valuing Sparton's total equity at approximately $234.8 million or 180.6 million pounds. As part of the acquisition, Ultra also said it will assume Sparton's net debt at completion.

Sparton noted Monday that during the review of the proposed merger by the United States Department of Justice or DOJ, the United States Navy expressed the view that instead of the parties proceeding with the merger, each of Sparton and Ultra should enhance its ability to independently develop, produce and sell sonobuoys and over time, work toward the elimination of their use of Sparton's and Ultra's ERAPSCO joint venture for such activities.

The staff of the DOJ then informed Sparton and Ultra that it intended to recommend that the DOJ block the merger. Both the companies expected that the DOJ would follow this recommendation and seek an injunction in court to block the merger.

As a result of the view of the Navy and the position of the DOJ, Sparton and Ultra determined that it was in the best interests of the parties to proceed to terminate the merger agreement.

Sparton said that the company and Ultra also understand that the DOJ intends to open an investigation for purposes of evaluating the parties' ERAPSCO joint venture.

Based on historical practice, Sparton expects that the Navy will assist in funding the company's transition to independently developing, producing and selling sonobuoys.

In addition, due to termination of the merger deal with Ultra, Sparton said it will seek to re-engage with parties that had previously expressed an interest in acquiring all or a part of Sparton and that are in a position to expeditiously proceed to effect such a transaction.