Spectronix won the UA Army contract, to face a class action suit
30 August, 2015
Spectronix estimated that the JLTV win will result in $7 million sales year for at least 10 years. Now the shareholders want a bite, and demand NIS200 million dividend
Last week Spectronix estimated that the JLTV win will result in $7 million sales year for at least 10 years. Now the shareholders want a bite in the prize, and demand NIS200 million dividend
Sometime success comes with unexpected price. In August 25, 2015 The U.S. Army has awarded Oshkosh Defense, LLC, a $6.7 billion production contract to manufacture the Joint Light Tactical Vehicle (JLTV), to replace many of its legacy HMMWV fleet with a new light tactical vehicle. Oshkosh expects to deliver approximately 17,000 vehicles and sustainment services.
For the small company of Spectronix from Sderot, Israel, it was a huge peace of news. Spectronix is an expert in explosion suppression and fire extinguish products inside military vehicles and armored fighting vehicles. Spectronix develops, manufactures, and markets optical flame and gas detection and suppression systems. Its solutions also include automatic fire and explosion detection systems, damage control systems, and fire extinguishing technologies. .In 2007, it have joined forces with Amerex Defense from the US. Under a licensing agreement with Spectronix, Amerex began manufacturing explosion suppression products and finally became a major sub contractor for Oshkosh JLTV program.
Last week Spectronix estimated that the JLTV win will result in $7 million sales year for at least 10 years. An important amount of money for a company whose annual sales for 2014 totaled approximately $40 million. But the celebration was very short: One day following the win announcement, it received the approval of a class action against the company, demanding the cancellation of the planned merger transaction with the US based Emerson Electric, or to compensate the shareholders, immediately, in the amount of NIS200 million.
In June this Emerson signed an acquisition agreement to buy all Spectronix shares for $99 million. The transaction will be carried out in two steps: paying $79 million for all the outstanding shars, and by the end of this month paying another $20 million as dividend to all the shareholders of the company. Now the merger agreement in under question: Spectronix announced it is study the class action suit to decide how to react, and to learn the potential implications for its future.