Titan to Acquire BTG, Inc.
SAN DIEGO, Sept. 20 /PRNewswire/ -- The Titan Corporation (NYSE: TTN) today announced that it has entered into a definitive agreement to acquire BTG, Inc. (Nasdaq: BTGI), a provider of information technology solutions and services primarily to the US military and other government agencies for $13.35 per BTG share or approximately $114.9 million in Titan common stock and $27.0 million in cash. The purchase price, which includes the assumption of approximately $32 million in debt, represents approximately .68x BTG's calendar 2001 expected revenues of $255 million. The transaction is expected to close by the end of 2001 and will be accretive to Titan's earnings in 2002. Credit Suisse First Boston acted as a financial advisor to Titan on the transaction.
Founded in 1982, BTG has been providing systems and solutions development, analysis and consulting, integration and support services to US defense and intelligence customers as well as to other government customers for almost twenty years. Areas of expertise include information collection and analysis, warfare modeling and simulation, software and systems integration, network design and architecture, and information and network security. Following the completion of the transaction, BTG's nearly 2000 employees will become part of Titan Systems, Titan's government information technology subsidiary.
"BTG's core competency in providing government information technology solutions and services is highly complementary to our existing operations at Titan Systems. While our capabilities are similar, there is little overlap in our customer base. As a result, this acquisition will further expand Titan Systems' reach into the US military and intelligence operations market and provide us with new opportunities to aggressively pursue new business. In addition, the synergies achieved by combining BTG with Titan Systems should allow us to significantly improve BTG's operating margins, creating value for both Titan and BTG shareholders," said Eric M. DeMarco, Executive Vice President and Chief Operating Officer of Titan.
"With the acquisition of BTG, Titan Systems should approach nearly $1.3 billion in revenues next year, with approximately $1 billion of that revenue generated by contracts for government information technology services and the remainder comprised of government product sales and government funded research and development projects. As with each of our subsidiaries, our goal for Titan Systems has been to create a company well positioned in its key market for long-term growth and capable of becoming an independent stand alone company. With $1 billion in government information technology service revenue, we believe we have achieved the goal that we set out to accomplish only a few years ago," said Gene W. Ray, Chairman, President and CEO of Titan.
Under the terms of the definitive agreement, a newly formed subsidiary of Titan will be merged with and into BTG, with BTG surviving the merger as a wholly owned subsidiary of Titan. All of the outstanding shares of BTG stock will be exchanged for Titan stock and cash pursuant to the terms of the definitive agreement, as set forth below. The merger is subject to the satisfaction of customary closing conditions, the approval of BTG's shareholders and the approval of Titan's lenders. The parties intend that the merger will be treated as a purchase for accounting purposed and, with respect to the Titan stock issued to BTG's shareholders, as a tax-free reorganization for tax purposes.
The total consideration, which is to paid in approximately 81% Titan stock and 19% cash, may change if Titan's stock falls below $17.75. If the 15 day average closing sales price for Titan's common stock (ending 5 trading days prior to the date of BTG's shareholders' meeting) is between $16.15 and $17.74, then Titan will issue approximately 6.5 million shares of Titan common stock to the BTG securityholders and cash in an amount equal to approximately 19% of the total consideration. If the average Titan closing price is less than $16.15, then Titan will issue shares of Titan common stock having an aggregate value of approximately $104.6 million to the BTG securityholders and cash in an amount equal to approximately 19% of the total consideration.
The foregoing summary is a general description of certain pricing and related terms contained in the definitive agreement for the transaction, and is qualified in its entirety by reference to the definitive agreement, a copy of which will be filed by Titan with the Securities and Exchange Commission.
Titan intends to file a Registration Statement on Form S-4 and BTG plans to file a Proxy Statement, with the Securities and Exchange Commission in connection with the transaction. Titan and BTG expect to mail a Proxy Statement/Prospectus to stockholders of BTG. These documents contain important information about the transaction. Investors and security holders are urged to read these documents carefully when they are available. Investors and security holders will be able to obtain free copies of these documents through the website maintained by the U.S. Securities and Exchange Commission at www.sec.gov.
Headquartered in San Diego, The Titan Corporation creates, builds and launches technology-based businesses, offering innovative technical solutions. Three of Titan's four core businesses develop and deploy communications and information technology solutions and services. In addition, Titan's SureBeam (Nasdaq: SURE) subsidiary markets the leading technology for the electronic pasteurization of food products and Titan is continually identifying promising technologies suitable for commercialization. The company has 7,800 employees and annualized sales of approximately $1.1 billion. |
