By entering into a definitive merger agreement, API Technologies Corp. and Spectrum Control, Inc. are providing for the cash acquisition of Spectrum by API. Pursuant to the terms of the definitive agreement, API will acquire 100% of the issued and outstanding equity of Spectrum for $20 per share for a total purchase price of approximately $270 million. Spectrum's board of directors has unanimously approved the merger and recommends that its shareholders vote in favor of the transaction. Upon closing of the transaction, Spectrum will operate as a wholly owned subsidiary of API.
The transaction is subject to customary closing conditions, including approval pursuant to the Hart-Scott-Rodino Antitrust improvements Act of 1976. In connection with the transaction, API has been provided with firm commitments for debt financing in a principal amount of $215 million by Morgan Stanley Senior Funding, Inc., an affiliate of Morgan Stanley & Co., Inc.
For the first quarter of fiscal 2011, Spectrum Control has reported net income of $3.3 million or 25 cents per diluted share on sales of $41.2 million. For the same period last year, the company had a net income of $2.4 million or 19 cents per diluted share on sales of $37.9 million. Factored into these earnings is the firm's 2010 acquisition of all of the outstanding common stock of Summit Instruments, Inc. In June 2010, it also acquired substantially all of the assets and assumed certain liabilities of Sage Laboratories, inc.
The acquired Sage business is now reported within Spectrum's Microwave Components and Systems Business. In the current quarter, total sales of the Microwave Components and Systems Business were $19.8 million compared to $17.8 million in the first quarter of fiscal 2010. Excluding the impact of the current period of Sage Labs' product sales (totaling $2.9 million), sales of Spectrum's microwave products were down approximately 5% from the same quarter of last year. According to the company, these numbers reflect continued cautiousness throughout the military/defense industry. The company predicts that this uncertainty will continue for at least a few more months.