FAIRFIELD, New Jersey - Velocity One, an aerospace manufacturing holding company, has entered into a definitive merger agreement with EMCORE Corporation (NASDAQ:EMKR), a provider of advanced inertial navigation systems. The deal, backed by the investment firm Charlesbank Capital Partners (WA:CPAP), values EMCORE at $3.10 per share in cash. The transaction has received unanimous approval from EMCORE's board of directors.
With this acquisition, EMCORE will become a wholly owned subsidiary of Velocity One, joining other industry players under its umbrella, including Cartridge Actuated Devices, Inc. and Aerosphere Power. The merger is expected to leverage the combined expertise and customer base to drive growth and efficiency across the entities.
John Borduin, CEO of Velocity One, expressed enthusiasm for the merger, highlighting EMCORE's technology and product portfolio. He anticipates that the combined experience and customer relationships will propel EMCORE into a new phase of expansion.
Brandon White, Managing Director at Charlesbank, echoed Borduin's sentiments, recognizing the opportunity to unite three leading aerospace businesses to establish a significant market presence. Charlesbank's investment is poised to support the aligned growth and focus of the combined companies.
EMCORE's CEO, Matt Vargas, remarked that the merger emphasizes the company's dedication to its customers, including those involved in high-priority U.S. and NATO defense programs. Vargas believes that EMCORE will be better positioned to meet global customer needs and deliver enhanced solutions as part of Velocity One.
This strategic move aims to create a global leader in aerospace and defense by integrating the strengths of the companies involved. The merger is also expected to capitalize on EMCORE's proprietary products to drive the success of the new platform.
Financial advisory services for the transaction were provided to Velocity One by Skyway Capital Markets, LLC, and Launch Point Partners LLC, with Foley & Lardner LLP serving as legal counsel. EMCORE was advised by Craig-Hallum Capital Group LLC, with Pillsbury Winthrop Shaw Pittman LLP as legal counsel.
The announcement is based on a press release statement and further details will be filed with the Securities and Exchange Commission, including a proxy statement for EMCORE shareholders regarding the proposed transaction.
In other recent news, EMCORE Corporation has been the subject of a significant all-cash acquisition proposal by Mobix Labs Inc. The offer, set at $3.80 per share, represents a 200% premium over the stock's closing price prior to the announcement. The Board of Directors at EMCORE is currently evaluating this unsolicited, non-binding offer. Craig-Hallum analysts have upgraded EMCORE shares from Hold to Buy, setting a new price target of $3.00, in light of this acquisition proposal.
Simultaneously, EMCORE has received a default notice from its lenders, represented by HCP-FVI, LLC, resulting in a surge in interest rates to 18% on EMCORE's loans under the Credit Agreement. This is the third such notice for EMCORE, which has contested previous notices and is currently in discussions to resolve the issue.
These are the latest developments for EMCORE, a company that reported a 115% revenue increase in its last fiscal year, reaching $97 million. The potential acquisition by Mobix Labs is expected to enhance its footprint in the defense sector, following its recent acquisitions of EMI Solutions and RaGE Systems. However, the outcomes of the proposed acquisition and the default notice negotiations remain uncertain.
InvestingPro Insights
The proposed acquisition of EMCORE Corporation (NASDAQ:EMKR) by Velocity One at $3.10 per share represents a significant premium to the company's current market valuation. According to InvestingPro data, EMCORE's market cap stands at $21.49 million, with the stock's previous closing price at $2.37. This merger offer aligns closely with the fair value of $3.00 estimated by analysts and the InvestingPro Fair Value of $3.08, suggesting that Velocity One sees substantial value in EMCORE's assets and technology despite recent financial challenges.
InvestingPro Tips highlight that EMCORE has been "trading at a low Price / Book multiple" of 0.41, which may have made it an attractive acquisition target. The company's strong return of 156.38% over the last three months, as reported by InvestingPro, indicates growing investor interest leading up to this merger announcement.
However, it's worth noting that EMCORE faces some financial headwinds. An InvestingPro Tip points out that the company is "quickly burning through cash" and "may have trouble making interest payments on debt." These factors likely contributed to EMCORE's decision to accept the merger offer, as it provides an opportunity for financial stability and growth under Velocity One's umbrella.
For investors seeking more comprehensive analysis, InvestingPro offers 14 additional tips for EMCORE, providing a deeper understanding of the company's financial position and market performance.
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