On December 18, 2019, Cubic Corporation, a Delaware corporation (“Cubic”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Cubic, Locus Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Cubic (the “Merger Sub”), Pixia Corp., a Delaware corporation (“Pixia”), and FG Pixia LLC, solely in its capacity as the representative of all of the equityholders of the Company (the “Equityholder Representative”). Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into Pixia (the “Merger”), with Pixia surviving the Merger as a wholly-owned subsidiary of Cubic. The Merger Agreement is the result of Cubic’s exercise of its option to purchase the balance of the issued and outstanding equity of Pixia pursuant to Cubic’s $50.0 million purchase of Pixia common stock (representing approximately 20% of the fully-diluted equity of Pixia) in July 2019. The parties expect to complete the transaction in the first quarter of 2020 after satisfaction of customary closing conditions as described below.
Upon the effectiveness of the Merger, the equity holders of Pixia (other than dissenting stockholders) will receive aggregate cash consideration of $200.0 million, subject to adjustments in respect of, among other things, cash and cash equivalents, net working capital and Pixia indebtedness as of the Merger closing.
Consummation of the Merger is subject to customary conditions, including without limitation: (i) approval of the Stockholders of Pixia holding at least 90% of the outstanding capital stock of Pixia on a fully-diluted basis and not more than 10% of the shares of Pixia capital stock dissenting with respect to approval of the Merger; (ii) approvals from regulatory bodies having jurisdiction over any such matters and receipt of certain third party consents; (iii) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and (iv) the absence of any law, injunction, judgment or ruling prohibiting the Merger or making the consummation of the Merger illegal. Moreover, each of Cubic’s, Merger Sub’s and Pixia’s obligation to consummate the Merger is subject to certain other conditions, including without limitation: (x) the accuracy of the other party(ies)’ representations and warranties contained in the Merger Agreement (subject to certain qualifiers); and (y) the other party(ies)’ compliance with its covenants and agreements contained in the Merger Agreement in all material respects. Under Pixia’s existing voting agreement among its stockholders, all of the stockholders of Pixia are required to vote in favor of the Merger and the Merger Agreement.
The parties have made customary representations and warranties and covenants in the Merger Agreement. Cubic, on the one hand, and the equityholders of Pixia, on the other, have also agreed to mutually indemnify each other for breaches of representations and warranties and covenants, subject to certain limitations set forth in the Merger Agreement. As of signing, Cubic has bound “representation and warranty” insurance which will provide coverage for breaches of representations and warranties of Pixia contained in the Merger Agreement, subject to deductibles, exclusions, policy limits and certain other terms and conditions. The Merger Agreement contains certain termination rights for Cubic and Pixia.
Cubic will fund the Merger consideration from cash on hand and existing credit facilities.