Diebold woos Henry Bros


Seems Diebold was among some serious suitors for Henry Brothers, but with the "Go Shop" period expiring at midnight last night, Kratos appears to have won.

HBE and Kratos announced the $45 m. merger agreement in October. At that time it began a 40-day Go-shop period where HBE was able to entertain offers from other suitors.

Henry Brothers announced this morning that it had amended its merger agreement with Kratos Defense and Security Solutions. The original agreement, was for $7 per share. That agreement's been upped to $8.20 per share in cash.

According to a Kratos statement, "The Agreement and Plan of Merger was amended, and the merger consideration and termination fee were increased, as a result of HBE notifying us pursuant to the terms of the merger agreement that they have received an acquisition proposal from Diebold, Inc. (Diebold), a publicly traded company with significant presence in the New York/New Jersey market. Pursuant to its proposal, Diebold offered to acquire 100% of the outstanding capital stock of HBE for $8.00 per share in cash. The Diebold proposal did not include a financing contingency."

The Kratos statement says it's filed a definitive proxy statement with the U.S. Securities and Exchange Commission, and HBE's Shareholder Meeting to vote on the proposed transaction is scheduled for December 9, 2010. Dec., 9  "is also the date that we expect to close the transaction. The executed Amendment will not change the December 9, 2010 HBE Shareholder meeting date, or the expected transaction closing date."

A Henry Bros. statement gives some details about the 40-day go-shop period. It says that during that time, HBE's financial advisor, Imperial Capital, contracted 117 potential transaction partners "at the request of and on behalf of HBE". Of those, 11 parties went further in the process, entering into confidentiality agreements, and were alllowed to review non-public information about HBE.

As the result of that process, "on Nov. 9, 2010, a third party submitted a non-binding proposal to acquire all oft he outstanding shares of HBE common stock for $8.00 per share."

The HBE statement, says "HBE is permitted to continue to have negotiations and discussions with this third party with respect to its acquisition proposal ... As the third party has not completed due diligence to date, its proposal is subject to, among other things, completion of due diligence review and negotiating the terms of a definitive agreement."

That seems to indicate that a Diebold deal is not totally dead, right? However, the HBE statement also says: "HBE's Board of Directors has not withdrawn, changed or otherwise modified its unanimous recommendation in favor of the proposed merger with Kratos. The stockholder meeting to vote on the proposed merger between HBE and Kratos has been scheduled to take place on December 9, 2010."

I've got calls into Imperial Capital and HBE and Kratos, so will report back with more information.