Friday, September 5, 2008

Gerber Scientific buys Virtek after StockerYale deal fails

By Mass High Tech Staff

After Salem N.H.-based StockerYale Inc. failed to acquire Canada-based laser technology maker Virtek Vision International Inc. through its final offer two weeks ago, South Windsor, Conn.-based Gerber Scientific Inc. has swooped in to buy the company for $33 million in cash.

The deal, which comes in at 99 cents per share, is almost 30 cents per share more than StockerYale’s (Nasdaq: STKR) final bid of 70 cents per share, which was rejected after months of public negotiations on August 27.

The acquisition will be funded through Gerber’s (NYSE: GRB) existing $125 million line of credit, according to the company.

While unanimously approved by the Gerber Scientific board of directors, the deal still requires shareholder and regulatory approvals. In the meantime, Virtek (TSX: VRK) is prohibited from soliciting any competitive offers. However, if the company receives an unsolicited offer for a higher value, Gerber maintains the right to match that competing offer. If Virtek proceeds with a superior proposal that Gerber chooses not to match, Virtek would be required to pay a break fee to Gerber of $1.08 million, plus a reimbursement of expenses of up to $235,000.

Representatives of StockerYale could not be reached for comment.

For Gerber Scientific, the deal would “immediately add approximately $50 million to Gerber’s annual revenue while providing a platform for worldwide growth in Gerber’s industrial and other composite materials applications,” officials said.

Virtek reported revenue of $49 million for the twelve months ended April 30, 2008, with gross margins at 49.4 percent, according to officials.

Virtek’s industrial laser solutions serve the needs of the global manufacturing sector by providing templating, inspection, marking and engraving products. Virtek serves customers in the aerospace, prefabricated construction, transportation, metalworking, tool and die and mold making industries worldwide. The majority of Virtek’s sales are in North America and Europe.

Gerber Scientific employs about 2,200 people and in 2007 made $14 million in net income on sales of $640 million.