On June 26, 2008, SYS Technologies, (AMEX: SYS) announced that their shareholders had approved the merger with Kratos Defense and Security Solutions (Nasdaq: KTOS) . The meeting was held on June 24, 2008. Companies had announced the possible merger on May 27, 2008. Although SYS had been operating profitably for the last three quarters, their revenues were not increasing much, on a quarterly basis. Also, the company's cash reserves were diminished. The merger could aid the company financially. However, Kratos has its own problems. Having over 2,000 employees, Kratos is nearly five times larger than SYS. Still, Kratos operates at a loss, losing on average $11.6 million per quarter. Hopefully the SYS addition to the Kratos infrastructure will at least pull them closer to profitability, making this merger beneficial to both companies.
After the markets opened on June 27, 2008, both companies' shares fell rather significantly. SYS fell over 4% from its previous close at $2.45, signaling the deal doesn't impose a feeling of good news to investors.
SYS will be exchanging each of its shares for 1.25 shares of Kratos. The estimated price for SYS was at about $53 million when the deal was announced.
About both companies:
SYS Technologies operates as a provider of information connectivity solutions mostly used by the Department of Defense, Department of Homeland Security and various governmental agencies as well as commercial companies. The company's products allow capturing and analyzing real-time information as well as providing it to customers.
Kratos Defense & Security Solutions ie engaged in the field of IT services, network engineering and provision of weapon systems. The company's main clients are the United States federal government and various governmental agencies.
References:
www.systechnologies.com
www.kratosdefense.com
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