UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 27, 2005 (September
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21, 2005)
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ENGINEERED SUPPORT SYSTEMS, INC.
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(Exact Name of Registrant as Specified in Charter)
MISSOURI 0-13880 43-1313242
(State of Incorporation) (Commission File No.) (IRS Employer
Identification No.)
201 Evans Lane, St. Louis, Missouri 63121
(Address of principal executive officer) (Zip Code)
Registrant's telephone number including area code: (314) 553-4000
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
|X| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On September 21, 2005, Engineered Support Systems, Inc., a Missouri
corporation ("ESSI"), entered into a merger agreement (the "Merger
Agreement") with DRS Technologies, Inc., a Delaware corporation ("DRS"), and
Maxco, Inc., a Missouri corporation and a direct wholly-owned subsidiary of
DRS ("Maxco"). The Merger Agreement provides that, upon the terms and
subject to the conditions set forth in the Merger Agreement, Maxco will
merge with and into ESSI, with ESSI continuing as the surviving corporation
and a direct wholly-owned subsidiary of DRS (the "Merger").
The Merger Agreement further provides that, at the effective time,
each share of ESSI common stock, par value $0.01 per share (the "ESSI
Stock"), will be converted into the right to receive $43.00 per share
through a combination of cash and DRS common stock, par value $0.01 per
share (the "DRS Stock"), subject to a collar. For each of their shares of
ESSI Stock, ESSI's shareholders will be entitled to receive (1) $30.10 in
cash and (2) a fraction of a share of DRS Stock equal to an exchange ratio
as set forth in the Merger Agreement, which shall be determined as follows:
(a) if the average closing price of the DRS Stock for ten trading days prior
to the closing of the Merger (the "DRS Average Stock Value") is $57.20 or
greater, the exchange ratio shall be 0.2255; (b) if the DRS Average Stock
Value is less than $57.20 but greater than $46.80, the exchange ratio shall
be the quotient, calculated to the nearest one-ten thousandth, resulting
from dividing $12.90 by the DRS Average Stock Value; and (c) if the DRS
Average Stock Value is $46.80 or less, the exchange ratio shall be 0.2756.
Both DRS and ESSI have made customary representations, warranties
and covenants in the Merger Agreement. The Merger Agreement also contains
customary conditions, including approval of the Merger Agreement by holders
of at least two-thirds of the outstanding ESSI Stock; approval of the
issuance of DRS Stock by a majority of the total votes cast in a vote by DRS
stockholders, in which the total vote cast on the matter represents over 50%
in interest of all DRS Stock entitled to vote on the matter; and completion
of review under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Total consideration for the Merger, including ESSI debt to be
refinanced at closing, is estimated to be approximately $1.97 billion. The
cash portion of the Merger consideration, together with the debt of ESSI to
be refinanced, is estimated to be approximately $1.49 billion. Bear Stearns
& Co., Inc. has provided committed financing necessary for DRS to consummate
the Merger and for ongoing working capital needs. The Merger is expected to
close before the end of DRS's current fiscal year on March 31, 2006.
The foregoing description of the Merger Agreement is qualified in
its entirety by reference to the Merger Agreement, which is filed as Exhibit
2.1 hereto, and is incorporated into this report by reference.
On September 22, 2005, DRS and ESSI issued a joint press release
announcing their entry into the Merger Agreement, which is filed as Exhibit
99.1 hereto, and is incorporated into this report by reference.
Upon completion of the Merger, Gerald A. Potthoff, Chief Executive
Officer and director, Gary C. Gerhardt, Chief Financial Officer and
director, Daniel A. Rodrigues, President and Chief Operating Officer, and
Michael Shanahan, Sr., non-executive Chairman and director, will be entitled
to receive certain payments under preexisting contractual arrangements with
ESSI. Pursuant to their employment agreements with ESSI, Messrs. Potthoff,
Gerhardt and
Rodrigues will be entitled to certain change of control benefits, including
a lump sum cash payment in an amount equal to 2.99 times their average
annual compensation for the prior five fiscal years of employment. ESSI's
Board of Directors approved the recommendation of the Board's Compensation
Committee that Michael Shanahan, Sr. receive a fee of $5 million upon
consummation of the Merger pursuant to a Memorandum of Understanding dated
April 30, 2005 entered into when Mr. Shanahan retired as ESSI's executive
Chairman and executed a consulting agreement with ESSI.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995: This document contains forward-looking statements, within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, that are based on
management's beliefs and assumptions, current expectations, estimates and
projections. Such statements, including statements relating to DRS's and
ESSI's expectations for future financial performance, are not considered
historical facts and are considered forward-looking statements under the
federal securities laws. These statements may contain words such as
"believes," "anticipates," "plans," "expects," "intends," "estimates" or
similar expressions. These statements are not guarantees of the companies'
future performance and are subject to risks, uncertainties and other
important factors that could cause actual performance or achievements to
differ materially from those expressed or implied by these forward-looking
statements and include, without limitation, demand and competition for such
companies' products and other risks or uncertainties detailed in such
companies' Securities and Exchange Commission filings. Given these
uncertainties, you should not rely on forward-looking statements. Such
forward-looking statements speak only as of the date on which they were
made, and the companies undertake no obligations to update any
forward-looking statements, whether as a result of new information, future
events or otherwise.
ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT: DRS and ESSI
intend to file with the Securities and Exchange Commission one or more
registration statements on Form S-4 that will include a joint prospectus and
proxy statement to stockholders of DRS and ESSI and other relevant documents
in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS
OF DRS AND ESSI ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND
OTHER RELEVANT MATERIALS IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT DRS, ESSI AND THE PROPOSED TRANSACTION.
Investors and security holders may obtain a free copy of these materials
(when they are available) and other documents filed with the Securities and
Exchange Commission at the Securities and Exchange Commission's web site at
www.sec.gov. A free copy of the joint proxy statement/prospectus, when it
becomes available, also may be obtained from Engineered Support Systems,
Inc., 201 Evans Lane, St. Louis, MO 63121, Attn: Investor Relations, and
from DRS Technologies, Inc., 5 Sylvan Way, Parsippany, NJ 07054, Attn:
Investor Relations. In addition, investors and security holders may access
copies of the documents filed with the Securities and Exchange Commission by
ESSI on its web site at http://www.engineeredsupport.com, and investors and
security holders may access copies of the documents filed with the
Securities and Exchange Commission by DRS on its web site at
http://www.drs.com. ESSI, DRS and their respective executive officers and
directors may be deemed to be participants in the solicitation of proxies
from their respective stockholders with respect to the proposed transaction.
Information regarding DRS's directors and executive officers is available in
its proxy statement filed with the Securities and Exchange Commission by DRS
on June 30, 2005, and information regarding ESSI's directors and executive
officers is available in its proxy statement filed with the Securities and
Exchange Commission by Engineered Support Systems on January 31, 2005. Other
information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or
otherwise, will be contained the joint proxy statement/prospectus and other
relevant materials to be filed with the Securities and Exchange Commission
when they become available.
This communication shall not constitute an offer to sell or the solicitation
of an offer to buy any securities, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such jurisdiction. No offering of securities shall be made except by
means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number Description
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2.1 Agreement and Plan of Merger, dated as of September 21,
2005, among Engineered Support Systems, Inc., DRS
Technologies, Inc. and Maxco, Inc.
2.2 Memorandum of Understanding, dated as of April 30, 2005,
issued by Engineered Support Systems, Inc. to Michael F.
Shanahan
99.1 Press release, dated September 22, 2005, issued jointly by
Engineered Support Systems, Inc. and DRS Technologies,
Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ENGINEERED SUPPORT SYSTEMS, INC.
Date: September 27, 2005 BY: /s/ David D. Mattern
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David D. Mattern
Secretary and General Counsel
EXHIBIT INDEX
Exhibit Number Description
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2.1 Agreement and Plan of Merger, dated as of September 21,
2005, among Engineered Support Systems, Inc., DRS
Technologies, Inc. and Maxco, Inc.
2.2 Memorandum of Understanding, dated as of April 30, 2005,
issued by Engineered Support Systems, Inc. to Michael F.
Shanahan
99.1 Press release, dated September 22, 2005, issued jointly by
Engineered Support Systems, Inc. and DRS Technologies,
Inc.