Innovative Solutions & Support, Inc. Response to Christopher Harborne Non-Binding Indication of Interest

Rhea-AI Summary

Innovative Solutions & Support (ISSC) responded to an unsolicited, non-binding indication of interest from Christopher Harborne to acquire all ISSC shares at $7.25 each.

However, the ISSC Board unanimously determined that the offer undervalues the company, lacks certainty, and is not in the best interests of stakeholders.

The Board expressed confidence in the senior management's ability to achieve long-term strategic goals, aiming to generate superior value for shareholders and stakeholders.

Positive

• The ISSC Board unanimously rejected the offer, demonstrating a strong and unified stance.
• The Board believes in the company's long-term strategic objectives, indicating confidence in future growth.
• ISSC aims to generate superior long-term value for shareholders and other stakeholders.

Negative

• The offer was deemed to undervalue ISSC, implying potential disagreements on the company's market valuation.
• The non-binding nature of the offer introduces uncertainty and lacks immediate actionable plans.
• Rejection of the offer might lead to short-term volatility in stock prices.

Financial Analyst

From a financial perspective, Christopher Harborne's non-binding indication of interest at $7.25 per share carries significant implications. For context, a non-binding offer means that the proposed terms are subject to further negotiations and due diligence, indicating that there's no guarantee the transaction will be finalized.

Harborne's offer effectively sets a floor price for IS&S's shares, providing a reference point for investors. However, the Board's rejection of the offer due to undervaluation suggests that they believe the current share price does not reflect the company's intrinsic value. This response may bolster investor confidence in the company's future prospects, highlighting the Board's belief in the long-term strategic objectives.

Moreover, the rejection underscores a critical aspect: IS&S's current and potential shareholders might expect a higher value per share, assuming the company's strategic goals are met. The ongoing confidence in the senior management's strategic execution suggests that the company is poised for growth, potentially leading to higher future valuations.

Retail investors should consider the implications of this non-binding offer: while it suggests a lower limit to the stock's value, the Board's objection points to an optimistic future outlook that might justify a higher share price. Understanding both the immediate and long-term financial context is key in making informed investment decisions.

Market Research Analyst

Market dynamics play a important role in interpreting this news. The offer from Harborne signifies market interest in IS&S, potentially drawing more attention from other investors or acquirers. The proposed price of $7.25 per share being deemed undervalued by the Board signals that they perceive the company's market potential to be higher.

The Board's rejection also reflects confidence in the company's competitive positioning within the aviation systems integration market. By emphasizing the continued successful execution of long-term strategic objectives, the Board highlights a commitment to growing market share and enhancing technological capabilities in flight guidance and cockpit display systems.

This move could be seen as a strategic defense against undervalued acquisitions, aiming to protect shareholder interests. The decision to reject Harborne's offer might prompt the market to reassess IS&S's value, potentially leading to a revaluation of its stock price based on its future growth potential and strategic initiatives.

For retail investors, it's important to closely monitor market reactions and compare IS&S's strategic direction with industry trends. Understanding the broader market context will help in assessing the company's valuation and potential investment opportunities.

EXTON, Pa.--(BUSINESS WIRE)-- Innovative Solutions & Support, Inc. (“IS&S” or the “Company”) (NASDAQ: ISSC) announced its response to the unsolicited, non-binding indication of interest to make a proposal from Christopher Harborne (the “Non-Binding Indication of Interest”). The Non-Binding Indication of Interest contemplates a transaction in which Mr. Harborne would acquire all of the shares of the Company’s common stock not already owned by Mr. Harborne at a price of $7.25 per share in cash. Per its terms, the Non-Binding Indication of Interest is also subject to negotiation, due diligence, execution of definitive agreements, and clearance under applicable antitrust and other laws, among other contingencies.

After careful review and consideration consistent with its fiduciary duties, and in consultation with its financial, legal and other advisors, the Board of Directors of the Company (the “Board”) unanimously determined that the Non-Binding Indication of Interest undervalues IS&S, lacks certainty, and is not in the best interests of the Company and its stakeholders.

The Board remains confident that senior management’s continued successful execution of IS&S’s long-term strategic objectives will generate superior long-term value for the Company and its shareholders, customers, business partners and other stakeholders.

About Innovative Solutions & Support, Inc.

Headquartered in Exton, Pa., Innovative Solutions & Support, Inc. (www.innovative-ss.com) is a systems integrator that designs and manufactures flight guidance and cockpit display systems for Original Equipment Manufacturers (OEMs) and retrofit applications. The Company supplies integrated Flight Management Systems (FMS), Auto-Throttle Systems and advanced GPS receivers for precision low carbon footprint navigation.

FORWARD LOOKING STATEMENT DISCLAIMER

In addition to the historical information contained herein, this press release contains “forward-looking statements” within the meaning of, and intended to be covered by, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In this press release, the words “anticipates,” “believes,” “may,” “will,” “intend” and similar expressions, as they relate to the business or to its management, are intended to identify forward-looking statements, but they are not exclusive means of identifying them. All forward-looking statements are based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions, risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to, the Company’s ability to efficiently integrate acquired and licensed product lines, including the Honeywell product lines, into its operations; a reduction in anticipated orders; an economic downturn; changes in the competitive marketplace and/or customer requirements; an inability to perform customer contracts at anticipated cost levels; and other factors that generally affect the economic and business environments in which the Company operates. Such factors are detailed in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2023, and subsequent reports filed with the Securities and Exchange Commission. Many of the factors that will determine the Company’s future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240613755720/en/

Investor Relations

610-646-9800 X550

Source: Innovative Solutions & Support, Inc.

FAQ

What was the offer price per share in Christopher Harborne's proposal for ISSC?

The offer price per share was $7.25 in cash.

Why did the ISSC Board reject the non-binding indication of interest?

The Board determined the offer undervalued ISSC, lacked certainty, and was not in the best interests of stakeholders.

What does ISSC's Board believe about the company's future?

The Board is confident that the senior management will achieve long-term strategic objectives, creating superior value.

What steps are involved in the non-binding indication of interest?

The steps include negotiation, due diligence, execution of definitive agreements, and legal clearances.