AirBoss Announces Acquisition of 100% Ownership of Airboss Defense Group
Newmarket, ON – AirBoss of America Corp. (TSX: BOS) (the “Company” or “AirBoss”) today announced that it has acquired the 45% minority interest in AirBoss Defense Group (“ADG”) that it does not currently own from Critical Solutions Holdings, LLC (“CSH”) (the “Transaction”). All figures USD unless otherwise noted.
Pursuant to the Agreement, the purchase price will be paid to CSH through the issuance from treasury of approximately 3.5 million AirBoss common shares and $20 million of cash, with $5 million payable on closing and $5 million payable on a quarterly basis for the following three quarters.
ADG was formed January 1, 2020 through the merger of AirBoss’s Defense and Industrial rubbers solutions businesses and other operations in Acton Vale, Quebec with Critical Solutions International, Inc. (“CSI”), a leading global supplier of route clearance vehicles, countermine capability and survivability products to U.S. and foreign military forces. Through the first half of 2020, AirBoss’s defense revenues quadrupled, operating income from the ADG segment grew fivefold, and ADG generated approximately $20 million in profit, driven by a major contract for ADG’s respirator systems by the U.S. Federal Emergency Management Agency. During the third quarter, ADG received a similar major contract from the U.S. Department for Health and Human Services. It has also received other governmental and non-governmental orders for personal protective equipment (PPE) during the current pandemic. Effective today, AirBoss will begin including 100% of ADG’s net income in AirBoss’ net income and EPS.
The proposed acquisition will not impact ADG’s management or operations as it was already tightly integrated within AirBoss of America.
“Through the course of 2020, the financial and operational benefits from the creation of ADG have borne out, and resulted in a significant deleveraging of our business,” said Gren Schoch, CEO of AirBoss. “The acquisition of full ownership of ADG will now provide us additional flexibility as it relates to future growth strategies for AirBoss, including potential M&A, and eliminate the minority interest in ADG’s profits and cash flows which is anticipated to be well received by our shareholders and potential new investors.”
“In a relatively short time, ADG has emerged as a global leader in PPE and survivability solutions. We are excited to now transition as an investor in privately held ADG into a strategic shareholder in parent company AirBoss, with the opportunity to participate along with other shareholders in AirBoss’s overall results,” said Paul Murphy of Sentinel Capital Partners, majority owner of CSH, which is expected to own approximately 13% of AirBoss’s pro forma outstanding basic common shares following the transaction.
“While continuing to execute on its defense business, ADG has successfully responded to the global COVID-19 pandemic in 2020 through the supply of its FlexAir™ Powered Air Purifying Respirator systems to various government agencies,” said Chris Bitsakakis, President and Chief Operating Officer of AirBoss. “The prolific nature of the COVID-19 contracts in 2020 may or may not recur, but we continue to provide PPE for biological and chemical threats to both the military and health care markets during these challenging times. ADG continues to be positioned as an important driver of our overall business through its expanded survivability solutions product platform for both first responder and military applications.”
Related to the Transaction, Davies Ward Phillips & Vineberg LLP is providing legal counsel, with Hogan Lovells serving as US regulatory counsel. Kirkland & Ellis LLP is providing legal counsel to CSH, with Stikeman Elliott LLP serving as Canadian legal counsel.
AirBoss of America Corp.
AirBoss of America Corp. is a group of complementary businesses supplying custom compounded rubber, survivability solutions and anti-vibration components to a diverse group of customers globally. AirBoss Rubber Solutions is a top-tier North American custom rubber compounder with 450 million turn pounds of annual capacity. AirBoss Defense Group manufactures and supplies a growing array of Chemical, Biological, Radioactive, Nuclear and Explosive (“CBRN-E”) protective solutions and is a leading provider of personal protective equipment to governments, militaries and frontline healthcare workers both in the U.S. and internationally. AirBoss Engineered Products is a supplier of innovative anti-vibration solutions to the North American automotive market. The Company’s shares trade on the TSX under the symbol BOS. Visit www.airbossofamerica.com for more information.
