Black Box: $600 Million IT Solutions Provider Acquired For Only $16.3 Million -

AGC Singapore acquires Black Box Corp., a $600 million technology solutions provider in Pittsburgh. The purchase price, apparently only about $16.3 million, has inspired several law firms to take a closer look at the deal -- potentially seeking to help shareholders pursue a higher valuation.

Under terms of the merger agreement, a U.S. subsidiary of AGC Singapore will buy Black Box's common stock for $1.08 per share in cash. As a result, Black Box's market capitalization has climbed to about $16.3 million, according to Yahoo Finance.

Black Box's business has been under pressure. In a February 2018 SEC filing, the company disclosed that it may not be able to generate sufficient adjusted EBITDA to meet a debt covenant with lenders. As a partial step forward, Black Box sold its government solutions division to Arlington Capital Partners earlier this year.

Taking a Closer Look

Fast forward to present day, and the merger agreement with AGC follows a "thorough review of the full range of available strategic, financial and capital structure alternatives," Black Box asserts.

Some legal first apparently don't agree. At least three law firms -- including Bragar Eagel & Squire; Brodsky & Smith; and Levi & Korsinsky -- say they plan to take a closer look at the M&A deal for potential valuation missteps.

Still, Black Box and AGC say the deal has upside opportunities. For instance, the two companies say the deal gives AGC:

deeper access into the North America market; and
$600 million in additional annual revenue and approximately 3,000 team members.

Both companies provide managed services capabilities in Unified Communications and Collaboration, Cloud, Data Center and Edge Technologies. AGC adds its expertise in digital applications and cybersecurity to Black Box’s infrastructure and mobility background, the companies say.

Executives Weigh In

In a prepared statement, AGC Networks CEO Sanjeev Verma said:

“We have known Black Box for many years and believe that its skilled teams and strong client relations with world-class enterprises and partners will allow us to better serve our global clients. The merger of our two companies will create a unique organization that has the scale to deliver world-wide technical solutions to the largest organizations.”

Added Black Box CEO Joel Trammell:

“We were looking for a partner that could provide us with the resources to grow our services and products businesses in a way that benefitted clients and employees. As we visited in depth with the AGC team, it became obvious that the fit was very strong and that the combination would make our company more exceptional. I look forward to working with Sanjeev and his team to build a world class global technology services company.”

ChannelE2E will be watching to see if the deal receives regulatory approval.