Cemtrex Inc., a Farmingdale provider of electronics manufacturing services, Monday upped the ante in its bid to acquire Key Tronic Corp., a company whose market capitalization is more than twice as large as its own.
Cemtrex, which in September unveiled a one-for-one exchange of its stock, valued at about $3, for the roughly $7 per share Key Tronic, made a revised debt and stock offer it says is worth $11 per share.
After publication of the news release and government filing Monday morning, shares of Key Tronic, a provider of electronics manufacturing services based in Spokane Valley, Washington, climbed 3.6 percent to close Monday at $7.16. Key Tronic shares are down about 10 percent over the past 12 months. Cemtrex stock, which has declined about 26 percent in the past 12 months, moved up 1.7 percent Monday to close at $2.97.
A call to Brett Larsen, chief financial officer of Key Tronic, and an email to Saagar Govil, chairman and chief executive of Cemtrex, were not returned.
Cemtrex said it is offering Key Tronic shareholders a debenture with a principal value of $10, due in 2024, and paying 4 percent interest per year, and one-third of a share of Cemtrex common stock.
A debenture is a form of debt that is not secured by physical assets or collateral. Cemtrex said it planned to list the debenture, which would pay quarterly interest, on the Nasdaq or OTC markets.
“The purpose of the offer is for Cemtrex to acquire control of, and ultimately the entire interest in, Key Tronic,” Cemtrex said in the news release.
Cemtrex, with a market capitalization of about $30 million, posted 2016 sales of $93.7 million, a 64.7 percent increase over the previous year. Key Tronic, with a market capitalization of about $77 million, reported sales of $467.8 million for the fiscal year ended July 1, a 3.5 percent decline from the previous year.
In September, Key Tronic management dismissed the initial offer by Cemtrex, citing the relative stock prices and saying it is “very skeptical” of Cemtrex’s reported financial information because the company is not audited “by a nationally recognized accounting firm.”