Private-Equity Firms and ST Engineering in Bidding War for Cubic Corp. -- Update

By Cara Lombardo

A bidding war has erupted around defense- and transit-technology company Cubic Corp., which had agreed to sell itself to a pair of private-equity firms before a new corporate suitor surfaced last week.

Veritas Capital and the private-equity arm of Elliott Management Corp. in February agreed to pay $70 a share to take Cubic private. Singapore Technologies Engineering Ltd. then made an unsolicited bid of $76 last week.

Since then, the private-equity duo raised its bid to $72 a share, and ST Engineering responded by boosting its offer to $78, according to people familiar with the matter. Neither of those bids has previously been reported.

Cubic shares closed Friday at $74.80.

This is the second bidding war waged in recent weeks. Laser-maker Coherent Inc.'s agreed sale to Lumentum Holdings Inc. attracted other suitors and, roughly 10 bids later, resulted in II-VI Inc. agreeing to buy the California company last week.

Cubic, which has a market value of around $2.4 billion, primarily provides technology products for transit systems and the military. Customers of the transit business include the New York Metropolitan Transportation Authority, which operates the New York City subway, and the operator of the London Underground. The defense side provides technology to customers including U.S. and allied forces.

Cubic on March 22 said it was engaging with ST Engineering but continued to recommend the Veritas-Elliott deal to shareholders in the meantime. It disclosed in a filing that ST Engineering had proposed buying the company for between $72 and $75 a share in January but it ultimately went with the private-equity firms' offer, partly due to considerations around regulatory approval.

Cubic's board is expected to meet to compare the latest bids, some of the people said.

ST Engineering is based in Singapore but has operations throughout the U.S. Its technology serves the aerospace, defense and public-security markets. The company is roughly 50%-owned by Singaporean sovereign-wealth fund Temasek Holdings.

Should ST Engineering prevail, it could be one of the first major tests of merger policy under the Biden administration. The Trump administration blocked a $117 billion hostile bid for U.S.-chip maker Qualcomm Inc. from Broadcom Ltd., which at the time was based in Singapore, due to concerns about Broadcom's ties to China amid an intensifying rivalry between the U.S. and the Asian nation.

Among ST's projects that could draw scrutiny is a Chinese venture using its Smart City technology, which enables surveillance of city streets.

ST Engineering has pointed to its history of obtaining approval from the Committee on Foreign Investment in the U.S., the panel that vets foreign deals, for all 11 of its past U.S. acquisitions in which clearance had been sought. It also said last week that after closing a deal for Cubic, it plans to sell the business focused on defense and security to an affiliate of Blackstone Group Inc.

Write to Cara Lombardo at cara.lombardo@wsj.com

(END) Dow Jones Newswires

March 29, 2021 14:59 ET (18:59 GMT)

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