Acquisition Update

RNS Number : 7858M

Chemring Group PLC

01 June 2010

 



FOR IMMEDIATE RELEASE                                                                                      1 JUNE 2010

CHEMRING GROUP PLC

UPDATE ON THE CONDITIONAL ACQUISITION

OF THE ALLIED DEFENSE GROUP, INC.

On 19 January 2010, Chemring Group PLC ("Chemring") announced that it had entered into a conditional agreement (the "Merger Agreement") to acquire the entire issued stock capital of The Allied Defense Group, Inc. ("ADG"), a US public company traded on the NYSE AMEX, for a cash consideration of $7.25 per share equating to $59 million (£36 million).

On the same day as Chemring's announcement, ADG received a subpoena from the US Department of Justice ("DOJ") requesting that ADG produce documents relating to its dealings with foreign governments.  ADG also became aware that day that an employee of its US subsidiary, Mecar USA, Inc. ("Mecar US"), had been indicted by the DOJ for allegedly engaging in schemes to bribe foreign government officials to obtain and retain business. The unsealed indictment of this employee and the DOJ's press release indicated that the alleged criminal conduct was on behalf of another US company unrelated to ADG or Mecar US.

Over the last four months, ADG has been co-operating with the DOJ and has provided an initial response to the subpoena limited, with the agreement of the DOJ, to matters related to the indicted former employee of Mecar US. ADG has been providing regular updates to Chemring during this period.

ADG and Chemring have now received feedback from the DOJ with respect to the DOJ's subpoena. The DOJ has indicated that it will request additional documents from ADG and expand its review beyond matters related to the indicted former employee of Mecar US.

In light of this feedback from the DOJ, the Chemring Board has concluded that it is presently unwilling to consummate the acquisition of ADG pursuant to the terms of the Merger Agreement. Chemring is now reviewing its options with regards to ADG, which may include a restructuring of the transactions contemplated by the Merger Agreement. A further update will be provided in due course.

For further information:

Dr David Price            Chief Executive, Chemring Group PLC          01489 881880

Paul Rayner                Finance Director, Chemring Group PLC        01489 881880

Rupert Pittman           Cardew Group                                                 0207 930 0777 

 

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