Servotronics Tender Offer Lifted to $47.00 for Acquisition by TransDigm

On May 19, 2025 TransDigm Group Incorporated agreed to acquire Servotronics for $38.50 per share in cash, representing a 274 percent premium to the closing share price on May 16, 2025. After competing expressions of interest, Servotronics and TransDigm executed an amendment on May 29, 2025, raising the tender offer price to $47.00 per share. This amendment followed an unsolicited proposal from a third party, which Servotronics’ board concluded did not qualify as a superior proposal under the amended merger agreement. The deal remains structured as a two-step transaction under Delaware law, a cash tender offer followed by a back-end merger under Section 251(h) of the General Corporation Law of Delaware.

Timeline of the Acquisition Offer

• March 18, 2025

  • Confidentiality agreement between Servotronics and TransDigm begins the exchange of due diligence information.

• May 18, 2025

  • Servotronics and TransDigm sign the original merger agreement, under which a TransDigm subsidiary would commence a cash tender offer at $38.50 per share.

• May 19, 2025

  • Public announcement of the agreement and commencement of the Schedule TO filing process.

• May 28, 2025

  • Amendment No. 1 to the merger agreement is signed, setting the stage for the revised offer.

• May 29, 2025

  • Servotronics issues a press release from Elma, New York, confirming the tender offer price increase to $47.00 per share and noting that an unsolicited third-party proposal was reviewed and not deemed superior.

• June 2, 2025

  • TransDigm’s subsidiary files the amended Schedule TO to commence the $47.00-per-share tender offer.

Offer Mechanics

The transaction uses a two-step merger structure under Delaware law:

• Step 1 – Tender Offer

  • A subsidiary of TransDigm will purchase shares at $47.00 in cash, net of any withholding taxes. The offer is not subject to any financing condition.

• Step 2 – Back-End Merger

  • Upon completion of the tender offer and satisfaction of all conditions, the subsidiary will merge with and into Servotronics under Section 251(h) of the DGCL. No further stockholder vote is required.

Key terms and conditions include:

• Minimum Condition – Valid tenders must represent at least a majority of the 2,556,502 shares outstanding plus the 52,689 shares underlying performance share units as of closing on May 30, 2025.

• Expiration and Extensions – The offer will expire one minute after 11:59 p.m., New York City time on June 30, 2025, unless extended. TransDigm is required to extend the offer for any period mandated by law or SEC rules, and for successive ten-business-day periods up to November 18, 2025 unless all conditions are satisfied earlier.

• Termination Rights – Either party may terminate if the merger agreement conditions are not met or a superior proposal emerges within defined parameters.

Board Recommendation

Servotronics’ board of directors unanimously recommends that shareholders tender their shares in the offer. In its May 29 press release, the board noted that while the Company received an unsolicited acquisition proposal, it determined after careful review that the proposal did not qualify as a superior proposal under the merger agreement . The directors continue to believe the amended $47.00 offer represents the best value and certainty for shareholders.

Financial Rationale

TransDigm’s strategy typically targets niche, high-margin aerospace components. Servotronics’ servo-control products serve both commercial aerospace and defense markets, with significant aftermarket revenue.

Key financial highlights:

• Premium to Market – The $47.00 offer is approximately 280 percent above the pre-announcement trading price of Servotronics shares.

• Deal Value – Implied equity value of roughly $120 million, inclusive of tax benefits.

• Revenue Profile – Servotronics generated approximately $45 million in fiscal 2024 revenue with high margin proprietary products.

• No Financing Condition – The all-cash deal is fully committed from TransDigm’s balance sheet, adding certainty of close.

• Shortened Uncertainty Period – The Section 251(h) framework and absence of a shareholder vote requirement should limit execution risk and business disruption.

What Shareholders Should Consider

Shareholders weighing whether to tender should keep in mind:

• Certainty of Cash – Immediate liquidity at a substantial premium.

• Market Risk – Remaining public shares could face price pressure absent definitive close.

• Alternative Proposals – The board has the right to consider superior proposals through the end of the offer period.

• Tax Implications – Cash consideration may trigger capital gains treatment; consult your tax advisor.

• Future Prospects – As a private subsidiary of TransDigm, Servotronics may forgo public market exposure and potential long-term equity upside.

Frequently Asked Questions

What is the revised acquisition offer price?

The tender offer price was increased from $38.50 to $47.00 per share in cash, net of taxes.

When does the tender offer expire?

The offer expires one minute after 11:59 p.m. New York City time on June 30, 2025, unless extended under the merger agreement or by law.

Do I need to vote my shares?

No stockholder vote is required for the merger step, as the deal is structured under Section 251(h) of Delaware law.

What happens if I do not tender my shares?

Any non-tendered shares will be converted into the right to receive the same cash price in the back-end merger, provided the offer conditions are met.

Can the board consider other proposals?

Yes. The board may terminate the merger agreement to accept a superior proposal, subject to the terms of the existing agreement and applicable fees.

Servotronics Tender Offer Acquisition

Servotronics Tender Offer Acquisition

Financial Disclaimer

This article is for informational purposes only and does not constitute an offer or solicitation to buy or sell any securities. The proposed transaction remains subject to regulatory approvals and other customary closing conditions. Investors should review all tender offer materials, including the amended Schedule TO and related exhibits, when filed with the U.S. Securities and Exchange Commission, and consult with their financial and tax advisors before making any investment decision.