Rail equipment suppliers L.B. Foster and Portec Rail Products said they agreed to extend to Dec. 30 the deadline to complete their pending merger in which Foster is buying Portec’s stock for nearly $115 million.
Foster also said it thinks that divesting some rail joint manufacturing assets at a Portec factory could satisfy concerns of the Department of Justice’s Antitrust Division so that the DOJ would approve the merger.
Foster and Portec are both based in Pittsburgh, Pa., and, while Foster markets a range of products to other industries, both sell a number of rail products. Foster previously said the DOJ was concerned that a combination of the two rail supply manufacturers "would have an anti-competitive effect with respect to the insulated bonded rail joint product."
By The Numbers: U.S. Rail Cargo.
When they first announced their deal in February, Foster said it would pay $11.71 a share in cash. Portec subsequently valued the transaction at $114 million, counting both outstanding shares and those issuable to outstanding options.
With this latest extension of the terms to yearend, from Aug. 31, Foster also agreed to raise the share price to $11.80, which puts the deal value close to $115 million. And Foster agreed to pay Portec $2 million if the transaction does not close by Dec. 30.
As of Aug. 30, the companies said 7,784,297 shares of common stock had been tendered and not withdrawn from the offer. Those, along with 185,500 shares that Foster already owns, make up 82.96 percent of outstanding common shares.
But the companies said “the primary obstacle” to finishing the deal has been the DOJ’s antitrust concerns, “particularly related to Portec's domestic joint business. Although there can be no assurance that L.B. Foster will satisfy the DOJ's antitrust concerns, L.B. Foster believes the DOJ should approve the transaction if assets relating to the joint business of Portec's Huntington, W.Va., facility are divested to a viable buyer.”
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