IDIS Co. and Costar Technologies (OTC Markets Group: CSTI) announced the execution of a definitive agreement under which Costar will be acquired by IDIS.
Under the merger agreement, IDIS will pay approximately $23.2 million, which includes approximately $13 million to retire Costar’s bank debt. After debt, transaction expenses and adjustments, it is expected that Costar stockholders will receive approximately $5 to $5.38 per share, representing an 11% to 20% premium to Costar’s average share price over the last 12 months and a 4% to 12% premium to Costar’s closing price on March 22.
The merger agreement has been unanimously approved by the boards of directors of each of company. Completion of the transaction is subject to approval by the stockholders of Costar. The board of directors of Costar has recommended the merger be approved.
Stockholders collectively holding approximately 45% of the outstanding shares of Costar common stock have entered into voting and support agreements. The merger is expected to close during the second quarter of 2023.
The acquisition will be funded by existing cash reserves of IDIS.
“Leveraging Costar’s established distribution networks and sales channels in the U.S. gives a significant boost to IDIS’ growth strategy, which is founded on building long-term relationships with systems integrators,” said IDIS CEO Kim Young-Dal. “With this acquisition, IDIS will diversify and synergize its presence in the government sector and intelligent transportation systems. Driving our business in these, previously hard-to-penetrate areas and expanding into new markets, will provide a foundation for building our business not only in the U.S., but globally.”
Coppell, Texas-based Costar Technologies manufactures and distributes a range of security solution products including surveillance cameras, lenses, DVRs and high-speed domes. The company also distributes industrial vision products to observe repetitive production and assembly lines.
IDIS will continue using the Costar name, with Costar becoming a wholly owned subsidiary of IDIS. The present Costar management team and employees are expected to join IDIS following the closing of the acquisition. Scott Switzer will continue in his role as CEO.
“As Costar’s largest supplier, [IDIS’s] success in the security industry combined with their engineering expertise have made them a prized partner over the years," Switzer said. "Now, with access to their entire range of advanced technologies and resources, we can deliver enhanced solutions and services to our customers."
The exclusive financial advisor for IDIS is NMC Resource Corp. and for Costar is Imperial Capital. Legal advisors for IDIS are McMillan LLP and for Costar are DLA Piper.
