AirBoss acquires full ownership of defence joint venture

Newmarket, Ontario – AirBoss of America Corp. has acquired the remaining 45% minority interest in AirBoss Defense Group (ADG) from Critical Solutions Holdings (CSH) to become the full owner of the defence business.

CSH will receive about 3.5 million AirBoss common shares and $20 million (€17 million) in cash, with $5 million payable upon closing and $5 million to be paid on a quarterly basis for the following three quarters, according to Chris Bitsakakis, president and CEO AirBoss.

The approximate value for the total transaction is roughly $70 million, he said, a figure that could go up or down depending on the AirBoss share price when the market closes on 26 Oct. 

The transaction will give CSH ownership of approximately 13% of AirBoss' outstanding basic common shares.

ADG was formed on 1 Jan, through the merger of AirBoss' defence division, industrial rubber solutions businesses and other operations in Acton Vale, Quebec, with Critical Solutions International (CSI) – a military supplier of route clearance and countermine offerings, as well as survivability products.

Throughout the first half of 2020, the company's revenues for defence products quadrupled, operating income from ADG grew fivefold, and ADG generated about $20 million in profit.

The growth was principally driven by a major contract for respirator systems from the US Federal Emergency Management Agency.

During the third quarter, the defence group received a similar major contract from the US Department for Health and Human Services. 

That was followed by other governmental and non-governmental orders for personal protection equipment during the pandemic.

The acquisition of full ownership will not impact ADG's management or operations, as it already was tightly integrated within AirBoss, the company said.

Thus far this year, "the financial and operational benefits from the creation of ADG have borne out and resulted in a significant deleveraging of our business," said AirBoss CEO Gren Schoch.

He said the acquisition of full ownership of ADG "will now provide us additional flexibility as it relates to future growth strategies for AirBoss, including potential mergers and acquisitions.”