IDIS Co. and Costar Technologies announced the execution of a definitive agreement and plan of merger pursuant to which Costar will be acquired by IDIS in a merger transaction.
The merger agreement has been unanimously approved by the boards of directors of each of IDIS and Costar. Completion of the Merger will be subject to approval by the stockholders of Costar. The board of directors of Costar has recommended that Costar stockholders approve the transaction and adopt the merger agreement at a special meeting of the stockholders of Costar to be called in connection with the merger transaction.
Stockholders collectively holding approximately 45% of the outstanding shares of Costar common stock have entered into voting and support agreements pursuant to which they have agreed, among other things, to vote their shares of Costar common stock in favor of the merger transaction. The merger is expected to close during the second quarter of 2023, subject to approval by the Costar shareholders and the satisfaction of customary conditions to closing.
Under the merger agreement, IDIS will pay approximately $23.2 million, subject to customary purchase price adjustments, inclusive of approximately $13.0 million to retire Costar's bank debt and with the remainder going to the holders of Costar common stock and vested options after payment of transaction expenses.
After debt, transaction expenses, and adjustments, it is expected that Costar stockholders will receive approximately $5.00 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, 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."
"We are extremely excited to be uniting with IDIS. As Costar's largest supplier, their success in the security industry combined with their engineering expertise have made them a prized partner over the years," said Scott Switzer, CEO of Costar. "Now, with access to their entire range of advanced technologies and resources, we can deliver enhanced solutions and services to our customers."
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.
The exclusive financial advisor for IDIS is NMC Resource Corporation and for Costar is Imperial Capital. Legal advisors for IDIS are McMillan LLP and for Costar are DLA Piper.
