Héroux-Devtek Inc., a leading international manufacturer of aerospace products and the world's third-largest landing gear manufacturer, today announced that it has entered into an arrangement agreement with an affiliate of Platinum Equity Advisors, LLC, a U.S. based private equity firm, pursuant to which the Purchaser will acquire all the issued and outstanding common shares of the Corporation, other than the shares to be rolled over by members of senior management of the Corporation, for $32.50 in cash per share, representing a total enterprise value of approximately $1.35 billion, subject to customary closing conditions.

The consideration offered to the Corporation's shareholders under the Transaction represents a 28% premium to the closing share price on July 10, 2024 and a 47% premium to the 90-day volume weighted average trading price per share on the Toronto Stock Exchange for the period ending on July 10, 2024.

The arrangement agreement is the result of a review of strategic alternatives available to the Corporation that was led by a Special Committee comprised solely of independent directors of the Corporation.

"After an extensive and robust strategic review process, we are pleased to have agreed on the terms of a transaction with Platinum Equity that has the full support of Héroux-Devtek's Board of Directors," said Louis Morin, Chairman of the Special Committee. "After careful deliberation, the Special Committee and the Board of Directors have unanimously concluded that the transaction is in the best interests of the Corporation and its stakeholders."

"We have admired Héroux-Devtek's growth for many years and have great respect for the business Gilles and his team have built," said Louis Samson, Co-President of Platinum Equity. "We believe the company's engineering prowess and emphasis on R&D have contributed to its success as a service-oriented supplier that delivers for its customers. Platinum Equity values Héroux-Devtek's commitment to customer service excellence and we are excited to partner with the company's management team in the next phase of its growth journey."

"Héroux-Devtek has established an impressive and well-deserved reputation for delivering innovative, high-quality products for the international aerospace and defence market," said Platinum Equity Managing Director Delara Zarrabi. "We believe the company has an opportunity to make an even larger impact on a global stage and we will deploy our financial and operational resources to help the company grow organically and through strategic acquisitions."

Rollover Shareholders

As part of the Transaction, members of senior management of the Corporation, including Gilles Labbé, Executive Chairman of the Board, and Martin Brassard, President and Chief Executive Officer, will roll over a portion of their common shares of the Corporation in the Purchaser for an amount per share equal to the consideration received by the Corporation's shareholders.

"We have come a long way since my business partner and I bought Héroux Inc. in 1985. Thanks to the hard work and dedication of our employees and the trust of our customers and business partners, we have grown into a leading international manufacturer of aerospace products and the world's third-largest landing gear manufacturer. In the coming years, our Saint-Hubert R&D Centre will pursue its mission by developing innovative solutions and products aligned with our customers' evolving needs," said Gilles Labbé, Executive Chairman of the Board of the Corporation.

"I joined Héroux-Devtek 30 years ago and I have always been impressed with the breadth and depth of our people. We design and manufacture amazing products and I look forward to working with Louis, Delara and the Platinum Equity team to further the execution of our growth plan," said Martin Brassard, President and Chief Executive Officer of the Corporation.

Héroux-Devtek to Remain a Québec-Based, International Leader

In connection with the proposed acquisition and pursuant to discussions with Caisse de dépôt et placement du Québec, Platinum Equity said Héroux-Devtek will maintain and invest in its headquarters and other operations in Québec, including its manufacturing operations. Additionally, the headquarters will continue to be responsible for the management functions of the business at an overall level consistent with current activities.

"Born and raised in Québec, I have great respect for the long tradition and proud history of the aerospace sector in the province and the contributions Héroux-Devtek has made to the industry," said Samson, who grew up in Québec City before moving to New York 25 years ago. "We will maintain the company's headquarters in Longueuil and continue investing in its R&D center in Saint-Hubert, which employs some of the best engineers in the industry."

"We are excited and honoured to have the opportunity to support a Québec industry champion like Héroux-Devtek and to continue to grow its presence as a global leader," added Samson.

"CDPQ has contributed to Héroux-Devtek's expansion and development since 1987, enabling it to become a global champion in its industry today. Following nearly 40 years of support, it was imperative that the company continue to grow while remaining anchored in Québec. With Platinum Equity's strong commitments to activities in Québec, CDPQ supports this transaction," said Kim Thomassin, Executive Vice-President and Head of Québec at CDPQ. "We want to underscore the leadership and entrepreneurial vision of Gilles Labbé and his teams who have contributed to the success of this leading aeronautics company."

Héroux-Devtek Board Recommendation

Héroux-Devtek's Board of Directors, having received the unanimous recommendation of the Special Committee, has unanimously determined (with interested directors abstaining from voting) that the Transaction is in the best interests of Héroux-Devtek and is fair to its shareholders (other than the Rollover Shareholders), and unanimously recommends that Héroux-Devtek's shareholders approve the Transaction.

Each of National Bank Financial Inc. and Scotiabank, as financial advisors to the Corporation and the Special Committee, and Desjardins Capital Markets, retained to provide independent financial advisory services to the Special Committee, has provided a fairness opinion to the Board of Directors and the Special Committee to the effect that, as at July 10, 2024, and based upon and subject to the assumptions, limitations and qualifications stated therein, the consideration to be received by shareholders pursuant to the Transaction is fair, from a financial point of view, to the shareholders of Héroux-Devtek (other than the Rollover Shareholders).

Desjardins Capital Markets has also delivered to the Board of Directors and the Special Committee an independent formal valuation of the common shares completed under the supervision of the Special Committee, to the effect that, as at July 10, 2024 and based upon and subject to the assumptions, limitations and qualifications stated therein, the fair market value of the common shares is in the range of $28.50 to $33.00 per share.

Transaction Details

The Transaction will be implemented by way of a plan of arrangement under the Business Corporations Act (Québec) and is expected to close before the end of the Corporation's current fiscal year ending March 31, 2025, subject to customary closing conditions, including the receipt of required shareholder approval, the approval of the Superior Court of Québec, and regulatory approvals and clearances in Canada, the United States, the United Kingdom and Spain. The Transaction is not subject to any financing condition.

Required shareholder approval for the Transaction will consist of at least 66⅔% of the votes cast on the Transaction by holders of common shares at a special meeting of shareholders of the Corporation, and at least a majority of the votes cast on the Transaction by holders of common shares, excluding shares held by the Rollover Shareholders and any other shares required to be excluded pursuant to Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions, at such meeting.

Concurrently with the execution of the arrangement agreement, the Purchaser has entered into voting support agreements with CDPQ, members of senior management and directors, together holding shares representing approximately 25% of the issued and outstanding common shares of the Corporation, pursuant to which they have agreed to vote all shares held by them in favour of the Transaction, subject to customary exceptions.

The arrangement agreement contains non-solicitation covenants on the part of the Corporation, subject to the customary "fiduciary out" provisions. A termination fee of $40 million would be payable by the Corporation to the Purchaser in certain circumstances, including in the context of a superior proposal supported by the Corporation. The Corporation would also be entitled to a reverse termination fee of $63 million if the Transaction is not completed in certain circumstances.

Following completion of the Transaction, the Corporation will become a privately held company and will apply to cease to be a reporting issuer under Canadian securities laws and the common shares will no longer be publicly traded on the Toronto Stock Exchange.

Additional information regarding the Transaction will be included in an information circular that the Corporation will prepare, file and mail to its shareholders in advance of the special meeting to be held to consider and approve the Transaction. Copies of the arrangement agreement and the information circular will be available under the Corporation's profile on SEDAR+ on www.sedarplus.ca.

Advisors

National Bank Financial Inc. and Scotiabank are acting as financial advisors to the Corporation and to the Special Committee and Desjardins Capital Markets was retained to provide independent financial advisory services to the Special Committee. Fasken Martineau DuMoulin LLP and Hogan Lovells LLP are acting as legal advisors to the Corporation and to the Special Committee, and Stikeman Elliott LLP and Latham & Watkins LLP are acting as legal advisors to Platinum Equity. BMO Capital Markets is acting as financial advisor to Platinum Equity and as the lead arranger for the financing.