Aeroflex Buyout

Aeroflex Incorporated (ARXX)
General Atlantic / Francisco Partners
$1.0B Buyout

Summary

Buyout of microelectronic and test solutions company

$13.50 per ARXX share; $1B total

ARXXnews - stock chart

Announced 3.02.07

Competing offer 5.22.07

Veritas Capital offers $14.50 / $1.1B total value

Aeroflex finds this a superior proposal
ARXX press release 5.22.07

Announces agreement with Veritas; terminates agreement with General Atlantic / Francisco 5.25.07

Developments

Original bidders sue over break-up fee payment

See Break-up Fee Litigation below

Closed 7.26.07

Club Deal

Buyout group

Advisors

Financial

ARXX : Bear Stearns / Banc of America
Sponsors: JP Morgan / Lehman Brothers

Legal

ARXX : Skadden Arps
Sponsors: Paul Weiss

Merger Agreement

General

EDGAR filing
Hyperlinked version
Detailed hyperlinked index follows

Article I The Merger

1.01 The Merger
1.02 Closing
1.03 Effective Time
1.04 Effect of the Merger
1.05 Certificate of Incorporation; Bylaws
1.06 Directors and officers

Article II Conversion of Securities; Exchange of Certificates

2.01 Conversion of Securities
2.02 Surrender of Certificates
2.03 Options
2.04 Dissenting Shares
2.05 Timing of Equity Rollover

Article III Company Reps

3.01 Organization and Qualification
3.02 Certificate of Incorporation and Bylaws
3.03 Capitalization
3.04 Authority Relative to this Agreement
3.05 No Conflict; Required Filings and Consents
3.06 Permits; Compliance with Laws
3.07 SEC Filings; Financial Statements; Undisclosed
Liabilities
3.08 Affiliate Transactions
3.09 Absence of Certain Changes or Events
3.10 Absence of Litigation
3.11 Employee Benefit Plans
3.12 Labor and Employment Matters
3.13 Real Property
3.14 Intellectual Property
3.15 Taxes
3.16 Environmental Matters
3.17 Specified Contracts
3.18 Insurance
3.19 Board Approval; Vote Required
3.20 Company Stock Options
3.21 Rights Agreement
3.22 Relationships
3.23 Opinion of Financial Advisors
3.24 Brokers
3.25 No Other Information

Article IV Parent and Merger Sub Reps

4.01 Corporate Organization
4.02 Certificate of Incorporation and Bylaws
4.03 Authority Relative to this Agreement
4.04 No Conflict; Required Filings and Consents
4.05 Absence of Litigation
4.06 Operations of Merger Sub and Parent; Ownership of
Company Common Stock
4.07 Financing
4.08 Guarantees
4.09 Brokers
4.10 No Other Information

Article V Conduct of Business Pending the Merger

5.01 Conduct of Business by the Company Pending the
Merger

Article VI Covenants of the Parties

6.01 Proxy Statement; Other Filings
6.02 Company Stockholders Meeting
6.03 Access to Information; Confidentiality
6.04 Acquisition Proposals
6.05 Directors and Officers Indemnification and Insurance
6.06 Employee Benefits Matters
6.07 HSR Act Filing
6.08 Notification of Certain Matters
6.09 Financing
6.10 Further Action; Reasonable Best Efforts
6.11 Public Announcements
6.12 Resignations
6.13 Actions Regarding Anti-takeover Statutes
6.14 Standstill Provisions
6.15 Rights Plan
6.16 Solvency Opinion
6.17 Obligations of Merger Sub

Article VII Conditions to the Merger

7.01 Each Party
7.02 Parent and Merger Sub
7.03 Company

Article VIII Termination

8.01 Termination
8.02 Effect of Termination
8.03 Fees and Expenses; Termination Fees

Article IX General Provisions

9.01 Non-survival of Representations, Warranties and
Agreements
9.02 Notices
9.03 Amendment
9.04 Waiver
9.05 Certain Definitions
9.06 Severability
9.07 Entire Agreement; Assignment
9.08 No Third Party Beneficiaries
9.09 Governing Law
9.10 Sole and Exclusive Remedy; Specific Performance;
Submission to Jurisdiction; No Recourse
9.11 Waiver of Jury Trial
9.12 Headings
9.13 Counterparts

Other Agreements

Rights agreement

Employment

Proxy Solicitation

Shareholder meeting

Scheduled for May 30

Proxy statements

Definitive - Veritas 6.22.07
Definitive 4.26.07
Preliminary - Veritas 6.05.07
Preliminary proxy statement 3.30.07

Deal Protection

Form 8-K summary

"Go shop" provision until 4.18.07

No shop covenant

Merger agreement §6.4
Proxy statement disclosure

Break-up fee

During "go shop" period, $15mm,
plus up to $7.5mm of out-of-pocket expenses
After "go shop" period, $30mm,
plus up to $7.5mm of out-of-pocket expenses

Merger agreement §8.3
Proxy statement disclosure

Break-up Fee Litigation

Original bidders sue over break-up fee payment

General Atlantic - Francisco Partners claim that competing offer from Veritas-led group didn't satisfy contractual requirements for a reduced break-up fee

Only Veritas was identified during go shop period,
not other members of its group
Terms of Veritas-led offer changed significantly after expiration of go-shop period

Original bidders were paid lower $15mm break-up fee
Seek payment of full $30mm break-up fee
Complaint Delaware Chancery 6.04.07 Vice Chancellor Parsons

Regulatory Approvals

HSR Act

Merger agreement §6.7
Proxy statement disclosure

Fairness Opinion

Fairness opinions: Bear Stearns / Banc of America

Tax Matters

Disclosure

Proxy statement disclosure

// This display the document title in the html page document.write(document.title);