Dublin, Ireland-based Armor Holdings, Inc. has signed a definitive merger agreement to acquire Houston-based Stewart & Stevenson Services, Inc. AH has agreed to pay $35 per share in cash for the business.
According to news services, the deal is worth $1.1 billion.
A manufacturer of medium and light tactical vehicles, Stewart & Stevenson was founded in 1902.
Robert R. Schiller, President of Armor Holdings, said, "This is truly a transformational event for our company. Stewart & Stevenson is one of the finest manufacturers of military vehicles in the world. Our position as the leading supplier of vehicular armor and safety systems for the up-armored HMMWV, numerous heavy tactical vehicles, and work for Stewart & Stevenson on the FMTV, has enabled us to grow our sales and earnings at excellent rates for the past several years. We believe this opportunity to become a prime contractor within the military's tactical wheeled vehicle fleet is extremely compelling. We expect to benefit from Stewart & Stevenson's world-class fabrication and assembly operations, strong research and development effort, and highly capable management team."
Max L. Lukens, President and Chief Executive Officer of Stewart & Stevenson commented, "Our Board of Directors unanimously concluded that this transaction with Armor Holdings provides significant value for our shareholders and is in the best interests of our customers and employees. Our Tactical Vehicle Systems business led by Denny Dellinger and his team has developed a standard of quality, reliability and vehicle readiness for the FMTV that we believe is unmatched in the industry. Armor Holdings, through its Aerospace & Defense Group, has a diversified portfolio of great products that it offers to the U.S. Department of Defense and other customers in various parts of the world. I believe the successful track record and complementary strengths of these two organizations offer a platform for future growth and expanded opportunities for the combined businesses."
Mr. Schiller added, "We believe that the integration of Stewart & Stevenson will further diversify our overall defense business, create improved multi-year visibility for revenues, make appropriate use of our strong financial position, and provide a wide variety of incremental growth opportunities. We expect the FMTV program to deliver strong growth going into the second-half of this year and to continue in 2007 and beyond. Based on this expectation and potential synergies from the combination, we expect the acquisition to be accretive to earnings in 2007. We are very excited to begin the process of integration and creation of a company that is stronger than either of its predecessors was individually."