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Aeroflex to be acquired by British company in $1.46B deal

"We believe Aeroflex and Cobham are a natural fit," Aeroflex chief executive Len Borow said in a statement Tuesday, May 20, 2014, announcing the all-cash deal to be acquired by British company Cobham Plc. Credit: Newsday / Jim Peppler

Aeroflex Holding Corp., the Plainview company whose motors drive the wheels, antenna and robotic arm joints of NASA's Mars rover Curiosity, said Tuesday that it has agreed to be acquired by a British aerospace company for $1.46 billion.

Cobham PLC will pay $10.50 per share for the Long Island company and will assume $540 million of its debt. The deal, negotiated in consultation with the private equity firms that own a majority of Aeroflex stock, has been approved by Aeroflex's board and is expected to close later this year.

"We believe Aeroflex and Cobham are a natural fit," Aeroflex chief executive Len Borow said in a statement announcing the all-cash deal.

Aeroflex has 2,600 employees in 20 locations. In 2012, the company had 288 workers on Long Island. Aeroflex didn't say what would happen to its workers, including those on Long Island, and didn't respond to a request for comment.

The sale, which still requires shareholder and regulatory approvals, continues a trend of Long Island losing its public companies. More than two dozen local businesses with stock traded on major exchanges have either transferred their headquarters elsewhere, shut down or been acquired since 2007. (A few of those companies, including NBTY Inc. and Globecomm Systems Inc., were bought by private equity firms and still have headquarters on Long Island; but they are no longer publicly traded and aren't locally owned.)

Aeroflex announced the deal before trading opened on Wall Street. The company's stock rose more than 25 percent to close at $10.42.

Aeroflex, whose microelectronics, motion control and radio transmission devices are used in the space, defense and wireless markets, has gone through a business downturn in recent years because of reduced U.S. government spending and a recession in Europe, Cobham CEO Bob Murphy said in a webcast.

"Although Aeroflex had an established track record of growth through 2011, [it] has been addressing a revenue downturn over the last three years," he said.

Still, he said Aeroflex "enjoys strong competitive positions" and is poised to resume growth.

Murphy said, "We're paying a fair price for a strong business that we can make even better together."

Cost reductions are expected to reach about $85 million per year once the merger is complete, Murphy said.

Earlier this month, Aeroflex reported a 1 percent decline in third-quarter net sales to $155.5 million.

Aeroflex, founded in 1937, was taken private in 2007 by Veritas Capital, Golden Gate Capital and the private equity arm of Goldman Sachs. The company went public again in 2010, but the private equity firms retained a majority stake.

Aeroflex agreed to pay an $8 million fine in 2013 in connection with violations of U.S. export controls on satellite components.

Curiosity's motors, known as actuators, were produced in Aeroflex's motion control facility in Hauppauge. They drive the six wheels of the one-ton vehicle and control other functions. International law firm Hogan Lovells advised Aeroflex on the U.K. issues related to the acquisition. Cobham was advised by BofA Merrill Lynch and Citigroup Global Markets.

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