American Science and Engineering (ASEI) Shares Soar on OSI Systems Takeover

Shares of American Science and Engineering Inc. (ASEI) were trading up +4.43 or +13.7 percent to $36.77 per share in Thursday’s premarket after news broke early this morning that OSI Systems (OSIS) would be taking over the company for $37 per share. American Science and Engineering stock closed at $32.34 per share, up +0.81 or +2.57 percent in Monday’s regular trading session.

Stock Analysis

Billerica, Massachusetts based American Science and Engineering Inc. was founded in 1958 and is focused primarily in the manufacture of x-ray equipment and related technologies.
The company was one of NASA’s first developers, with x-ray astronomy led by Riccardo Giacconi, the company was instrumental in the launch of the Einstein Observatory in 1978. The company currently manufactures transmission x-ray and backscatter x-ray equipment for airports, border crossings, important infrastructures, seaports and other locations where scanning security is required. American Science employs 360 people and had revenue of $126.7 million last year.

Hawthorne, California based OSI Systems Inc. is a global developer and marketer of security and inspection systems such as airport security x-ray machines and metal detectors. The company designs systems and components for critical systems for homeland security, aerospace and defense, and healthcare to name a few. The company has a presence in over a dozen countries and has a host of subsidiaries.

This morning, the two companies entered into a definitive agreement for OSI Systems to acquire American Science and Engineering Inc. for $37.00 per share in cash, for a total enterprise value of $187 million. The deal was unanimously approved by the board of directors of both companies and is still subject to approval by AS&E shareholders, regulatory agencies and other customary closing conditions.

Chuck Dougherty, President and Chief Executive Officer of AS&E said in this morning’s press release that, “We are very pleased to join OSI Systems, the capabilities of our respective organizations are extremely well-matched. We expect our customers and employees to benefit substantially from the combination of our technology-driven businesses.”

Deepak Chopra, OSI Systems’ Chairman and Chief Executive Officer, said, “The acquisition of AS&E will be the most significant security acquisition in our Company’s history and we believe represents an excellent strategic fit consistent with our expansion strategy. AS&E’s backscatter X-ray technology has long been a leader within the security industry, and its cutting-edge products, extensive service network, and premier customer base are highly complementary to our current operations. We look forward to welcoming AS&E’s talented team to OSI Systems.”

The merger is expected to generate at least $18 million of annual pre-tax cost synergies within the first two years of the closing of the transaction. The synergies include benefits from optimizing global business development and the manufacture and supply chain infrastructure.

The deal is expected to be accretive to OSI Systems’ fiscal 2017 non-GAAP diluted earnings per share with the exclusion of one-time transaction costs and integration expenses and at least 10 percent accretive to OSI Systems’ 2018 GAAP diluted earnings per share.

Other News About ASEI

American Science and Engineering posts 4Q loss

Company reported a loss of -$2.7 million in its latest quarter.

Are Shareholders Getting Enough in the AS&E Acquisition?

Are shareholders receiving enough? Or is the acquiring company paying too much?

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Published on Jun 21, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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