JACKSONVILLE, Fla. --- Armor Holdings, Inc. has reached a definitive agreement to acquire The Specialty Group, Inc., a leading supplier of individual protective equipment to the U.S. Department of Defense. Specialty Defense is a market leader in manufacturing Modular Lightweight Load-Carrying Equipment (MOLLE) Outer Tactical Vests (OTV) and Warrior Helmets to the U.S. Army. Armor Holdings will pay $92 million in cash, including the assumption of any debt.
The transaction, which is subject to the approval of Specialty Defense’s shareholders, federal anti-trust clearance, and other customary conditions, is anticipated to close in the fourth quarter of 2004. Specialty Defense owns and operates five manufacturing facilities in Pennsylvania, Kentucky and Tennessee, and expects to generate approximately $60 million in revenues for its fiscal year ending September 30, 2004. The Company currently has funded backlog of approximately $95 million, excluding executable options on existing contracts of approximately $137 million.
“We are extremely excited to add Specialty Defense to our growing and diversified defense business,” said Robert Schiller, President and Chief Operating Officer of Armor Holdings. “Through this acquisition, we expect to emerge as one of the Department of Defense’s largest and best capitalized suppliers focused on soldier equipment. As a critical supplier of body armor, load bearing backpacks and combat helmets, we expect Specialty Defense to be highly complementary to both our defense and law enforcement equipment businesses.
We intend to leverage the Company’s U.S. based high volume manufacturing capacity and its established reputation as a leader in OTV with some of our existing proprietary technology to compete aggressively in the recently announced multi-year solicitation for up to 360,000 vests. We also expect to integrate our significant research, development and engineering expertise into Specialty Defense’s existing programs, and to realize additional strategic and operational benefits from this combination. Specialty Defense strengthens our investment in life safety and survivability equipment for soldiers, reinforces our commitment to the U.S. Department of Defense, and enhances our law enforcement equipment business. Financially, we expect this deal to be immediately accretive and to significantly offset the dilutive impact of our June 2004 common stock offering.”
Lee Ferguson, Chief Operating Officer of Specialty Defense Systems, said, “Armor Holdings is a perfect partner for Specialty Defense. We expect that our business will benefit significantly from all of Armor’s resources, including its research and development, global distribution and financial capabilities. We hope to leverage these strengths in order to increase market share in each of our key programs within the military and to help increase Armor Holdings’ share of law enforcement business.”
Mr. Schiller concluded, “The Specialty Defense acquisition will fit our rather stringent financial, operational and strategic criteria. We remain committed to expanding our business through complementary acquisitions to support our business model, which is focused on providing our men and women in the military and law enforcement with the best protective systems and personal equipment available in the market today. We are pleased that this transaction contributes significantly to our product mix for our customers.”
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Armor Holdings, Inc. to Acquire Specialty Defense for $92 Million
