IDIS Co., Ltd. (“IDIS”) and Costar Technologies Inc. (“Costar”)(OTC Markets Group: CSTI) announced today that they had signed a binding merger agreement (the “Merger Agreement”) that will see Costar acquired by IDIS.
The Boards of Directors of IDIS and Costar have unanimously approved the Merger Agreement. The consent of the stockholders of Costar is required for the Merger to be completed. During a special meeting of the stockholders of Costar to be convened in conjunction with the merger transaction, the board of directors of Costar has recommended that the stockholders of Costar accept the transaction and adopt the Merger Agreement. In accordance with voting and support agreements, shareholders who jointly own about 45% of the outstanding shares of Costar common stock have committed, among other things, to vote their shares of Costar common stock in favor of the merger transaction. The transaction is anticipated to conclude in the second quarter of 2023, pending shareholder approval from Costar and the fulfillment of usual closing conditions.
According to the Merger Agreement, IDIS will pay about $23.2 million, subject to customary purchase price adjustments. Of this sum, about $13.0 million will be used to pay off Costar’s bank debt, and the remaining money will be distributed to the holders of Costar common stock and vested options after transaction costs have been covered. Following debt, transaction costs, and adjustments, Costar investors are anticipated to earn between $5.00 and $5.38 per share, reflecting an 11% to 20% premium over the company’s average share price over the previous 12 months and a 4% to 12% premium over the closing price on March 22, 2023. The purchase will be paid for with IDIS’s current financial reserves.
IDIS CEO, Mr. Kim Young-Dal, said “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. 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.”
Scott Switzer, CEO of Costar said, “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. Now, with access to their entire range of advanced technologies and resources, we can deliver enhanced solutions and services to our customers.”
Being a completely owned subsidiary of IDIS, Costar will continue to go under the name IDIS. The current Costar management group and staff are anticipated to join IDIS when the transaction is finalised. The position of CEO will remain with Scott Switzer.
NMC Resource Company and Imperial Capital are the exclusive financial advisors to Costar and IDIS, respectively. McMillan LLP and DLA Piper are the legal counsel for IDIS and Costar, respectively.