Armor Holdings Acquisition of Stewart & Stevenson Put On Hold

Defense Daily, May 10, 2006 by Calvin Biesecker

By Calvin Biesecker

Stewart & Stevenson Services, Inc. [SVC] shareholders yesterday failed to muster the two-thirds majority vote needed to approve their company's acquisition by Armor Holdings [AH], forcing the company to allow the vote to continue for another week.

Less than two-thirds of the nearly 30 million outstanding shares had been submitted in time for yesterday's special shareholder voting, prompting the delay until May 16, 5 p.m. Eastern time. Shareholders who fail to vote will have their votes counted as not in favor of the deal, which would pay them $35 per share.

Shareholders might be holding out for a better offer.

About a month after the two companies announced the pending merger in February, Stewart & Stevenson disclosed in a proxy filing to the Securities and Exchange Commission that two other companies had also submitted bids, one of them ultimately offering $35.50 per share. Oshkosh Truck Corp. [OSK] shortly thereafter identified itself as the high bidder.

In the proxy Stewart & Stevenson said its board had rejected the higher offer citing potential regulatory hurdles that could be difficult to overcome and the potential that it could lose out on the "firm, in-hand offer from Armor Holdings."

Oshkosh, which has said it is keeping close tabs on the merger process, said in late March that it didn't believe the potential regulatory hurdles would prevent or significantly delay a merger with Stewart & Stevenson.

Stewart & Stevenson makes medium-payload trucks for the Army and Oshkosh provides the U.S. military with medium and heavy-payload trucks.

Armor Holdings, the premier supplier of armor components for military trucks and utility vehicles, said yesterday it supported Stewart & Stevenson's decision to adjourn the shareholder meeting, saying it remains committed to the transaction at the negotiated price.

[Copyright 2006 Access Intelligence, LLC. All rights reserved.]

TICKER(S): Stewart & Stevenson Services, Inc. [SVC]: Armor Holdings [AH]: Oshkosh Truck Corp. [OSK]: