The Alexandria, Va., private equity firm courting Michael Baker raised its offering price three times in July before getting the board of the Moon engineering services firm to accept $40.50 per share.
Details of the negotiations were disclosed in documents filed Monday by Baker and Integrated Mission Solutions as part of IMS's tender offer for all of Baker's shares. The transaction values Baker at $396.9 million.
IMS is affiliated with DC Capital Partners, which began wooing Baker in December with an unsolicited offer to acquire the company for $24.25 per share. DC Capital had acquired a 5.2 percent stake in Baker in July 2012.
The December overture led to negotiations between the two companies and their lawyers, which culminated in IMS offering to purchase Baker for $37.50 per share on July 10. It subsequently raised the offer to $39 per share, then $40 before agreeing to pay $40.50 per share. The transaction was announced July 29.
The purchase price represents a 37 percent premium to Baker's closing price the day before the offer was disclosed.
Baker shares closed Monday at $40.59, up 8 cents. Shares are trading above IMS's offering price because investors who hold the stock as of Sept. 16 are entitled to an 18-cents per share dividend that is payable Oct. 2.
The tender offer is scheduled to expire Oct. 7, but could be extended.
Documents filed as part of the offer also indicate that IMS will name three of Baker's current directors to its board for at least three years and that it will not sell Baker for five years after the merger is completed without the approval of the majority of the Baker directors on its board.
The merger will create a company with more than $1 billion in annual revenue and approximately 5,000 employees.
IMS provides engineering, construction, consulting and other services to the intelligence community, the military and other federal agencies.
Baker supplies engineering, design, planning and other services. Its clients include the transportation, architecture, energy and government markets. The company reported a 2012 profit of $2.8 million on revenue of $593.4 million.
About 750 of Baker's 3,000 employees work in Western Pennsylvania.
IMS has said it plans on retaining Baker's name and its Moon headquarters and that it will keep the staff of the company "essentially intact."
In the documents filed Monday, IMS said that, for three years after the merger, it cannot drop the Baker name or move the headquarters without the approval of the majority of the Baker directors who join its board.
Len Boselovic: email@example.com or 412-263-1941.