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Investing.com -- Servotronics Inc. (NYSE American:SVT) stock is indicated to open more than 200% higher following the announcement of a definitive merger agreement with TransDigm Group Incorporated (NYSE:TDG). The agreement stipulates that Servotronics will become an indirect wholly owned subsidiary of TransDigm, a leading producer and supplier of highly engineered aircraft components.
Under the terms of the merger, TransDigm will initiate a tender offer to purchase all outstanding shares of Servotronics for $38.50 per share in cash. This transaction is valued at approximately $110 million, including certain tax benefits, and represents a substantial 274% premium over Servotronics’ closing share price on May 16, 2025, the last trading day before the announcement.
The acquisition, which has been unanimously approved by the Board of Directors of Servotronics, will be financed with TransDigm’s available cash and does not hinge on any financing conditions. Servotronics, a global leader in servo controls and other advanced technology components for aerospace and defense applications, reported approximately $45 million in revenue for the fiscal year ended December 31, 2024.
TransDigm’s President and CEO, Kevin Stein, expressed enthusiasm about the acquisition, stating, "We are excited to have an agreement to acquire Servotronics and welcome them to TransDigm. Servotronics’ highly engineered, proprietary products with significant aftermarket exposure fit well with our long-standing strategy."
Bill Farrell Jr., CEO of Servotronics, also commented on the merger, noting that becoming part of a larger aerospace company will foster further growth opportunities and enable the continued development of their highly engineered, proprietary products. He believes the transaction provides immediate and certain value for Servotronics’ shareholders and positions the company well for the future.
The tender offer for Servotronics shares is expected to commence on or before June 9, 2025, subject to customary closing conditions, including the valid tender of a majority of the outstanding shares of Servotronics common stock.
Baker & Hostetler LLP is serving as legal counsel to TransDigm, while Houlihan Lokey (NYSE:HLI) is acting as financial advisor and Bond Schoeneck & King as legal counsel to Servotronics. The significant stock movement reflects investor optimism about the acquisition’s potential to enhance TransDigm’s product offerings and market position.
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