NEWMARKET, Ontario—AirBoss of America Corp. has acquired the 45 percent minority interest in AirBoss Defense Group it did not previously own from Critical Solutions Holdings L.L.C.
CSH will receive about 3.5 million AirBoss common shares and $20 million in cash, with $5 million payable upon closing and $5 million to be paid on a quarterly basis for the following three quarters, according to Chris Bitsakakis, president and chief operating officer of Newmarket-based AirBoss.
The approximate value for the total transaction is roughly $70 million, he said, a figure that could go up or down depending on the AirBoss share price when the market closes on Oct. 26. The transaction will give CSH ownership of approximately 13 percent of AirBoss' outstanding basic common shares.
ADG was formed on Jan. 1, 2020, through the merger of AirBoss' defense division, industrial rubber solutions businesses and other operations in Acton Vale, Quebec, with Critical Solutions International Inc. CSI was a global supplier of route clearance and countermine offerings, along with survivability products to U.S. and foreign military forces.
Throughout the first half of 2020, the company's revenues for defense products quadrupled, operating income from ADG grew fivefold, and ADG generated about $20 million in profit, principally driven by a major contract for respirator systems from the U.S. Federal Emergency Management Agency.
During the third quarter, the defense group received a similar major contract from the U.S. Department for Health and Human Services. That was followed by other governmental and non-governmental orders for personal protection equipment during the pandemic.
The acquisition of full ownership of CSI will not impact ADG's management or operations, as it already was tightly integrated within AirBoss, the company said.
Thus far this year, "the financial and operational benefits from the creation of ADG have borne out and resulted in a significant deleveraging of our business," said AirBoss CEO Gren Schoch.
He said the acquisition of full ownership of ADG "will now provide us additional flexibility as it relates to future growth strategies for AirBoss, including potential mergers and acquisitions, and eliminate the minority interest in ADG's profits and cash flows, which is anticipated to be well-received by our shareholders and potential new investors."