ESCO Technologies Inc. (NYSE:ESE) agreed to acquire Ultra Electronics Measurement Systems / DNE Systems / Ultra PMES Limited / EMS Development Corp. from Ultra Electronics Holdings Limited for approximately $550 million on July 8, 2024. A cash consideration of $550 million will be paid by ESCO Technologies Inc. As part of consideration, $550 million is paid towards assets of Ultra Electronics Measurement Systems / DNE Systems / Ultra PMES Limited / EMS Development Corp. Pursuant to the agreement, ESCO Technologies will acquire from Seller or Seller?s subsidiaries all of the issued and outstanding equity interests of (i) Ultra PMES Limited, a private limited company incorporated in England & Wales (the ?UK Target Company?), (ii) Measurement Systems, Inc., a Delaware corporation, (iii) EMS Development Corporation, a New York corporation, and (iv) DNE Technologies, Inc., a Delaware corporation (collectively, the ?Business?), for a purchase price of approximately $550 million, plus or minus certain customary adjustments at closing and post-closing for cash, debt, working capital and transaction expenses as specified in the Purchase Agreement (the ?Transaction?). The Purchase Agreement also contains covenants customary for a transaction of the type contemplated by the Purchase Agreement, including (i) Seller?s obligation prior to the closing to conduct the Business in the ordinary course consistent with past practice in all material respects and to refrain from taking specified actions, subject to certain exceptions, and (ii) Seller?s obligations for a period of 24 months after closing with respect to non-solicitation of employees, non-competition and non-interference with respect to customers and suppliers of the Business, subject to certain exceptions. The Purchase Agreement will terminate if the conditions to the Transaction have not been fulfilled on or prior to nine months from the date of the Purchase Agreement. The parties have agreed to enter into related agreements ancillary to the Transaction that will become effective upon the consummation of the Transaction, including a transition services agreement. Pursuant to the Purchase Agreement, Buyer is required to cease use of the name ?Ultra? as soon as reasonably practicable after closing. Post completion of the acquisition, Signature Management & Power will become part of ESCO?s Aerospace & Defense (A&D) segment and is expected to have approximately $175 million of revenue in calendar year 2024, with Adjusted EBITDA margins in excess of A&D segment margins. The transaction will be funded through cash on hand and incremental debt, with committed financing in place I.e., as of July 8, 2024, in order to finance the Transaction, the Registrant also signed a Commitment Letter with JPMorgan Chase Bank, N.A., pursuant to which the Registrant will endeavor to obtain an amendment (the ?Best Efforts Amendment?) to its existing Amended and Restated Credit Agreement, dated as of August 30, 2023 (the ?Existing Facility?), in order to, among other things, obtain certain consents from existing lenders and implement a senior incremental delayed draw term loan credit facility in an aggregate principal amount of up to $350 million (the ?Incremental Facility?) and the Registrant has obtained commitments for a $500 million senior secured revolving facility (?Backstop Facility?). The proceeds of the loans drawn under the Incremental Facility, the revolver under the Existing Facility (as amended), the Bridge Facility and/or the Backstop Facility on the Closing Date will be applied to pay a portion of the cash consideration for the Business and other customary fees, premiums, expenses and costs incurred in connection with the Transaction.

The closing of the Transaction is subject to certain conditions, including the (i) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in the United States, as amended, and (ii) receipt of clearance under the UK National Security and Investment Act of 2021 (?NSIA?). Buyer has agreed to procure that the conditions are fulfilled as soon as possible, except that Buyer is not obligated to dispose or divest of any business or asset in excess of $20 million in value, and Buyer is obligated to retain the current NSIA undertakings applicable to the business of the UK Target Company at the appropriate level of Buyer?s corporate structure. ESCO was represented by J.P. Morgan Securities LLC as exclusive financial advisor and Bryan Cave Leighton Paisner LLP as legal advisor on this transaction. Lazard served as sole financial advisor and Weil, Gotshal & Manges (London) LLP served as legal advisor to Ultra Maritime Signature Management & Power.