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Sparton Corp. recently announced the termination by Sparton and Ultra Electronics Holdings plc of their July 7, 2017 merger agreement.
During the review of the proposed merger by the United States Department of Justice (DOJ), the United States Navy expressed the view that instead of the parties proceeding with the merger, each of Sparton and Ultra should enhance its ability to independently develop, produce and sell sonobuoys and over time work toward the elimination of their use of Sparton's and Ultra's ERAPSCO joint venture for such activities. The staff of the DOJ then informed Sparton and Ultra that it intended to recommend that the DOJ block the merger. The parties expected that the DOJ would follow this recommendation and seek an injunction in court to block the merger.
As a result of the view of the Navy and the position of the DOJ, Sparton and Ultra determined that it was in the best interests of the parties to proceed to terminate the merger agreement. Sparton and Ultra also understand that the DOJ intends to open an investigation for purposes of evaluating the parties' ERAPSCO joint venture. Based on historical practice, Sparton anticipates that the Navy will assist in funding Sparton's transition to independently developing, producing and selling sonobuoys.
The Board of Directors of Sparton continues to support Sparton’s management and employees in their implementation of improvements in Sparton’s operations and financial performance, their ongoing conduct of Sparton's business and their focus on delivering superior products and services to Sparton's customers around the world. In addition, as a result of the termination of the merger agreement with Ultra, Sparton will seek to re-engage with parties that previously expressed an interest in acquiring all or a part of Sparton and that are in a position to expeditiously proceed to effect such a transaction. There can be no assurance that any such transaction will occur.