MTS Systems Corporation (NasdaqGS:MTSC) entered into a definitive purchase agreement to acquire PCB Group, Inc. from David T. Hore, John A. Lally and David M. Lally for $580 million in cash on April 5, 2016. MTS intends to finance the transaction with a combination of equity and new debt financing. MTS has obtained a customary commitment for new debt financing of $100 million revolving credit facility and a $390 million term loan B facility and $250 million in gross cash proceeds from the issuance of senior unsecured notes and/or if MTS Systems is unable to issue the full amount of the Senior Notes at or prior to the closing of the merger, a senior unsecured bridge facility from JPMorgan Chase Bank, N.A. in support of the transaction. As on June 7, 2016, MTS announced an offering of consist of 1.5 million common shares and 1 million tangible equity units, each tangible equity unit with a stated amount of $100. The proceeds of the same will be used to finance the transaction. PCB Group reported adjusted EBITDA of $43 million on sales of $180 million for the period ended 2015. Upon Completion, MTS Sensors business unit will be combined with the PCB business, while retaining each company's well-established brand names. PCB Group will act as a wholly-owned subsidiary of MTS Systems. On termination of the deal, MTS shall pay a termination fee of $43.5 million and PCB Group shall pay a termination fee of $17.4 million. David T. Hore, current President of PCB will lead the combined entity and will report directly to Jeffrey Graves, President and Chief Executive Officer of MTS. The combined Sensors business unit will be headquartered in Depew, New York.

The transaction is subject to regulatory approvals, antitrust approval as per HSR Act, execution of exchange agreement, resignation of PCB Group directors, non-competition agreements, escrow agreement and other customary conditions. MTS and PCB Group Board of Directors and PCB Group shareholders have approved the transaction. The transaction is expected to be accretive to earnings by fiscal 2018 and, on a cash basis, which excludes transaction related intangible and financing expense amortization and non-recurring items, it is expected to be accretive in fiscal 2017. The transaction is expected to close in MTS's fiscal fourth quarter that ends October 1, 2016.

J.P. Morgan Securities LLC acted as financial advisor and Patrick J. Naughton, Wenli Cai, Nicole Annunziato, James Cross, Benjamin Baucom, Brian Robbins, Paul Koppel, Alina Grinman, Samantha Steinfeld, John Creed, Jordan Tamchin and George Davis, Michael Isby, Timothy Mulvihill, Krista Miniutti, Erik Quarfordt, Kathryn Christoforatos, Peter Guryan and Michael Naughton of Simpson Thacher & Bartlett LLP acted Robbinsas legal advisors to MTS Systems Corporation. BlackArch Partners LP acted as financial advisor and Gust P. Pullman of Barclay Damon, LLP acted as legal advisor to PCB Group. SunTrust Bank acted as escrow agent in the transaction. Accenture provided due diligence to MTS. Alan F. Denenberg and Max Brunner of Davis Polk acted as legal advisor to JP Morgan as financial advisor to MTS.