OSI Systems (OSIS) announced that it has signed a definitive agreement to acquire American Science and Engineering, Inc. (ASEI) for $37.00 per share in cash, representing a total purchase price of approximately $187M, net of $82M of AS&E cash and cash equivalents as of March 31, 2016.

The transaction has been unanimously approved by the OSI Systems and AS&E Boards of Directors. The closing of the transaction, anticipated during OSI Systems' fiscal second quarter ending December 31, 2016, is subject to the approval of AS&E's shareholders, antitrust approval, and other customary closing conditions.

The transaction is expected to result in at least $18M of annual pre-tax cost synergies within the first two years post-closing. These synergies include the benefits of optimizing global business development and administration, manufacturing and supply chain infrastructure, as well as the elimination of redundant public company costs.

The transaction is expected to be accretive to OSI Systems' fiscal year 2017 non-GAAP diluted earnings per share excluding one-time transaction expenses and integration costs and at least 10% accretive to OSI Systems' fiscal year 2018 GAAP diluted earnings per share. OSI Systems expects to fund the acquisition with a combination of balance sheet cash and borrowings from its existing $450M credit facility.

Pro forma for the acquisition, OSI Systems is anticipated to have a leverage ratio of 2.1x trailing 12 months pro forma adjusted EBITDA as of March 31, 2016, excluding anticipated annual cost synergies. OSI Systems expects continued strong cash flow generation from the combined business.

OSI Systems' financial advisors are Citigroup and Roth Capital and outside legal counsel are Latham & Watkins and Crowell & Moring.