Leidos and Altaris close joint venture deal to combine security screening businesses
Leidos and Altaris completed their previously announced joint venture transaction, creating a U.S.-based company operating under the Analogic brand.
Leidos Holdings, Inc. (LDOS) and investment firm Altaris completed their transaction to form a joint venture for security screening at airports, borders, and critical infrastructure, the company said in a filing on Monday.
Operating under the Analogic brand, the venture combines the Security Enterprise Solutions and Industrial Automation businesses of Leidos, Inc. with Analogic Corporation. Leidos contributed subsidiaries holding the assets of the SES and Industrial Automation business in exchange for 41.5% of the equity securities of the joint venture. Affiliates of Altaris contributed a portion of outstanding equity interests of Analogic Holding Company, Inc. in exchange for 58.5% of the equity securities, and sold the remaining portion of Analogic Holding for cash obtained through new debt financing.
"This JV creates an American innovator with the technology, talent and scale to address rapidly evolving global security screening needs," said Leidos Chief Executive Officer Tom Bell. "Its launch also sharpens our focus on the growth engines driving our NorthStar 2030 strategy."
Under the amended and restated limited liability company agreement, Altaris has the right to appoint a majority of the board of directors. Leidos will initially have the right to designate a minority of the available seats on the board, along with minority investor protective rights over certain material actions.
Distributions of available cash will be made at least once annually as determined by the board. No member is obligated to make further capital contributions after the closing date. The agreement includes transfer rights and restrictions, including drag-along rights for Altaris, tag-along rights for Leidos, and liquidity demand exit rights for Leidos following the seven-year anniversary of the closing date.
"The strategic combination of these two businesses into one reinforces our commitment to the important national security missions and markets we serve," Bell said.