DAYTON, Ohio, 27 December 2004. MTC Technologies, Inc., a provider of engineering, technical, and management services to the Department of Defense and national security agencies, announced that it has agreed to purchase all outstanding stock of Manufacturing Technology, Inc. (MTI) for $61 million.
The transaction, which is subject to a number of closing conditions, including government approval pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, is currently expected to close in the first quarter of 2005.
The net cost of the acquisition to MTC will be approximately $61 million, which is composed of $75 million in cash payments to MTI shareholders, less the net present value of income tax benefits of approximately $14 million associated with the tax structure of the transaction.
Based in Fort Walton Beach, Fla. and founded by Dr. Paul Hsu in 1984, MTI is a privately held company with approximately $50 million in revenue in 2004. MTI, with over 39 percent of its approximately 450 employees supporting sensitive government programs, specializes in total product life cycle support for electronics and other systems used in military and commercial applications.
MTI's major disciplines are obsolescence management, engineering, and manufacturing. MTI's customer base consists primarily of the U.S. Air Force, U.S. Army, U.S. Navy, and large prime contractors for the Department of Defense. Houlihan Lokey Howard & Zukin Capital acted as financial advisors to MTI for the transaction.
"The acquisition of MTI will significantly enhance our ability to provide obsolescence management services to Air Force Materiel Command and other Department of Defense programs," said David Gutridge, CEO of MTC. "MTI is at the forefront of obsolescence management with its proprietary AVCOM software and database system, deep program involvement, years of historical program success, and defined obsolescence processes. MTI's engineering and manufacturing capabilities allow the company to deliver a one-stop solution for obsolescence needs."
MTI founder Dr. Hsu noted: "Our primary concern as we sought a good strategic partner was to find a company that would not only help maximize and grow our company's capabilities but one which would do so while maintaining our corporate culture. In MTC, I believe we have found an excellent fit in both regards. I am especially pleased that Clifton Gilmore, our MTI president, will continue on in that capacity."
Mr. Gilmore will report to Jim Clark, MTC Executive vice president and director of the Air Forces Group. Mr. Clark observed, "This acquisition supports our Air Forces Group strategic initiatives by establishing an organic, obsolescence resolution expertise and providing a much expanded Line Replacement Unit (LRU) development and sales capability. Further, it is important to note that MTI's Huntsville, Alabama presence will further MTC's strategic goal of expanding our geographical footprint into that important customer base."
Mike Gearhardt, MTC senior vice president and CFO, indicated that the acquisition would be immediately accretive and that the company would be issuing revised guidance for 2005 after the transaction is closed.
MTC, through its wholly owned subsidiaries, provides systems engineering, information technology, intelligence, and program management solutions to the Federal Government. Named by Business Week as the 11th fastest growing small company in the United States, by Forbes as 23rd of the 200 best businesses in America, and by Washington Technologies as 2nd in revenue growth among the "Top 100" of IT Federal Prime Contractors, MTC employs nearly 2,000 people in more than 30 locations. The company was founded in 1984 and is headquartered in Dayton, Ohio. For more information, see www.mtctechnologies.com.