PAE Incorporated (NASDAQ: PAE, PAEWW) (“PAE” or “the Company”), a
leading, highly diversified, global company that provides a broad
range of operational solutions and outsourced services to meet
critical and enduring needs of the U.S. government, other allied
governments, international organizations and companies, today
announced that it has entered into a definitive agreement to be
acquired by an affiliate of Amentum Government Services Holdings
LLC (“Amentum”) in an all-cash transaction valued at approximately
$1.9 billion, including the assumption of debt and certain fees.
Amentum is a premier global technical and engineering services
partner supporting critical programs of national significance
across defense, security, intelligence, energy, and
environment.
Under the terms of the merger agreement, PAE shareholders will
be entitled to receive $10.05 per share in cash upon the
consummation of the transaction, which is subject to shareholder
approval and other customary closing conditions, including
regulatory approvals. The purchase price represents an
approximately 70% premium over PAE’s closing price on October
22, 2021, the last trading day prior to the announcement of the
transaction. The exercise price of PAE’s outstanding warrants will
be adjusted pursuant to PAE’s warrant agreement unless the warrants
are called for redemption pursuant to such warrant agreement.
“By achieving an approximately 70% premium over
PAE’s closing price on October 22, 2021, PAE’s Board believes
this transaction will deliver significant value for PAE’s
shareholders. This is a historic milestone in PAE’s legacy of
service to the U.S. Government spanning over 66 years,” said
Marshall Heinberg, Chairman of the Board of Directors. “I want to
commend Interim President and CEO Charlie Peiffer and the rest of
the PAE management team for their outstanding work in getting the
transaction to this point given many competing demands,” Heinberg
said.
“I believe joining the capabilities and resources of PAE and
Amentum will benefit the customers and employees of both companies.
This transaction creates new opportunities for the technology
innovation our customers need to drive their critical missions,”
said PAE Interim CEO and President Charlie Peiffer. “Aided by an
attractive demand environment and PAE’s diversification across its
customer base, contract portfolio and geographic reach, combining
with Amentum is expected to provide our customers a wide array of
capabilities and services via a broad range of contracting
vehicles. Furthermore, this transaction should provide strong
growth opportunities in terms of career development for our
employees.”
“Having a similar mission-oriented culture and creating new
opportunities for our employees while maximizing shareholder value
were of significant importance in the selection criteria for
partnership in PAE’s next chapter,” said Peiffer. “We believe that
joining with Amentum will enable PAE’s talented workforce to
deliver even more innovative solutions to our customers.”
PAE’s Board of Directors has unanimously recommended that its
stockholders approve and adopt the merger agreement with Amentum.
However, during a “go-shop” period effective through
November 29, 2021, PAE may actively solicit alternative acquisition
proposals from third parties in accordance with the terms of the
merger agreement. The merger agreement includes a “break fee” in
the event PAE terminates the merger agreement, and this “break fee”
will be discounted in the event of a termination during the
“go-shop” period. PAE does not intend to disclose developments with
respect to the solicitation process unless and until it determines
such disclosure is appropriate or is otherwise required. Following
the expiry of the “go-shop” period and the filing of the
definitive proxy statement with the U.S. Securities and Exchange
Commission (“SEC”) and subsequent mailing to stockholders, a
special meeting of PAE’s stockholders will be held as soon as
practicable to approve and adopt the merger agreement. The
transaction is not subject to any financing conditions. Upon
completion of the acquisition, which is expected to occur by the
end of the first quarter 2022, PAE will become wholly owned by an
affiliate of Amentum.
An affiliate of Platinum Equity, PE Shay Holdings, LLC, which
owns approximately 22.5% of PAE’s outstanding shares, has entered
into an agreement with the Company to vote its shares in accordance
with the recommendation of PAE’s Board with respect to the proposed
transaction.
PAE will file a current report on Form 8-K with the SEC
containing a summary of terms and conditions of the proposed
transaction.
AdvisorsMorgan Stanley & Co. LLC is acting
as financial advisor; Morgan Stanley & Co. LLC and Raymond
James & Associates, Inc. each provided fairness opinions to the
PAE Board in connection with the transactions. Goodwin Procter LLP,
Morgan, Lewis & Bockius LLP and Nichols Liu LLP are serving as
legal advisors to PAE. Cravath, Swaine & Moore LLP acted as
legal counsel to Amentum and Arnold & Porter Kaye Scholer LLP
acted as regulatory and government contracts counsel.
About PAEFor more than 66
years, PAE has tackled the world’s toughest challenges to deliver
agile and steadfast solutions to the U.S. government and its
allies. With a global workforce of approximately 20,000 on all
seven continents and in approximately 60 countries, PAE delivers a
broad range of operational support services to meet the critical
needs of our clients. Our headquarters is in Falls Church,
Virginia. Find us online at pae.com, on Facebook, Twitter and
LinkedIn.
About AmentumAmentum is a
premier global technical and engineering services partner
supporting critical programs of national significance across
defense, security, intelligence, energy, and environment. Amentum
draws from a century‐old heritage of operational excellence,
mission focus, and successful execution underpinned by a strong
culture of safety and ethics. Headquartered in Germantown,
Maryland, Amentum employs more than 34,000 people in all 50 states
and performs work in 105 foreign countries and territories. Visit
amentum.com to explore how Amentum delivers excellence for its
customers’ most vital missions.
Forward Looking StatementsThis communication
contains “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as
amended. When used herein, words such as “address,” “anticipate,”
“believe,” “consider,” “continue,” “develop,” “estimate,” “expect,”
“further,” “goal,” “intend,” “may,” “plan,” “potential,” “project,”
“seek,” “should,” “target,” “will,” and variations of such words
and similar expressions as they relate to PAE, its management or
the proposed transaction are often used to identify such statements
as “forward-looking statements.” Such statements reflect the
current views of the Company and its management with respect to
future events, including the proposed transaction, and are subject
to certain risks and uncertainties that may cause actual results to
differ materially from the results expressed in, or implied by,
these forward-looking statements. These risks and uncertainties
include, but are not limited to, the following: (i) PAE may be
unable to obtain stockholder approval as required for the proposed
transaction; (ii) other conditions to the closing of the
proposed transaction may not be satisfied, including that a
governmental entity may prohibit, delay or refuse to grant a
necessary regulatory approval; (iii) the proposed transaction
may involve unexpected costs, liabilities or delays; (iv) the
business of PAE may suffer as a result of uncertainty surrounding
the proposed transaction; (v) shareholder litigation in
connection with the proposed transaction may affect the timing or
occurrence of the proposed transaction or result in significant
costs of defense, indemnification and liability; (vi) PAE may
be adversely affected by other economic, business, and/or
competitive factors; (vii) the occurrence of any event, change
or other circumstances could give rise to the termination of the
definitive merger agreement with affiliates of Amentum;
(viii) PAE’s ability to recognize the anticipated benefits of
the proposed transaction; (ix) the risk that the proposed
transaction disrupts PAE’s current plans and operations or diverts
management’s or employees’ attention from ongoing business
operations; (x) the risk of potential difficulties with PAE’s
ability to retain and hire key personnel and maintain relationships
with suppliers and other third parties as a result of the proposed
transaction; and (xi) other risks to consummation of the
proposed transaction, including the risk that the proposed
transaction will not be consummated within the expected time period
or at all. Additional factors that may affect the future results of
PAE and the proposed transaction are set forth in filings that PAE
makes with the SEC from time to time, including those listed under
“Risk Factors” in PAE’s Annual Report on Form 10-K for
the year ended December 31, 2020, and filed with the SEC on
March 16, 2021, as updated, or supplemented by subsequent reports
that PAE has filed or files with the SEC. You are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date on which they are made. PAE assumes
no obligation to publicly update any forward-looking statement
after it is made, whether as a result of new information, future
events or otherwise, except as required by law.
Important Information for Investors and Where to Find
ItThis communication may be deemed to be solicitation
material in respect of the proposed acquisition of PAE by
affiliates of Amentum. In connection with the proposed transaction,
PAE intends to file relevant materials with the SEC, including a
proxy statement in preliminary and definitive form, in connection
with the solicitation of proxies from PAE’s shareholders for the
proposed transaction. The proxy statement will contain important
information about the proposed transaction and related matters.
BEFORE MAKING A VOTING DECISION, SHAREHOLDERS OF PAE ARE URGED TO
READ THE PROXY STATEMENT, AND OTHER RELEVANT DOCUMENTS, CAREFULLY
AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT PAE, THE PROPOSED TRANSACTION
AND RELATED MATTERS. Shareholders may obtain free copies of the
proxy statement and other documents (when available) that PAE files
with the SEC through the website maintained by the SEC at
www.sec.gov. Copies of the documents filed with the SEC by PAE will
also be available free of charge on PAE’s investor relations
website at www.investors.pae.com or by contacting PAE’s Investor
Relations Department.
Participants in the Solicitation PAE and
certain of its directors, executive officers and employees may be
deemed to be participants in the solicitation of proxies from PAE’s
stockholders in connection with the proposed transaction.
Information regarding the ownership of PAE securities by PAE’s
directors and executive officers is included in their SEC filings
on Forms 3, 4 and 5, and additional information about PAE’s
directors and executive officers is also available in PAE’s proxy
statement for its 2021 annual meeting of stockholders filed with
the SEC on April 30, 2021, and is supplemented by other
filings made, and to be made, with the SEC by PAE. Additional
information regarding persons who may be deemed participants in the
solicitation of proxies from PAE’s stockholders in connection with
the proposed transaction, including a description of their
respective direct or indirect interests, by security holdings or
otherwise, will be included in the proxy statement described above
when it is filed with the SEC. These documents are or will be
available free of charge as described above.
For investor inquiries regarding
PAE:Mark ZindlerVice President, Investor RelationsPAE+1
(703) 717-6017mark.zindler@pae.com
For media inquiries regarding
PAE:Terrence NowlinSenior Communications ManagerPAE+1
(703) 656-7423terrence.nowlin@pae.com
For inquiries regarding
Amentum:Christine Fuentes+1 (540)
935-9597christine.fuentes@amentum.comFollow @Amentum_corp on
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