Amphenol Corporation (NYSE:APH) entered into an agreement and plan of merger to acquire MTS Systems Corporation (NasdaqGS:MTSC) for $1.2 billion on December 8, 2020. Under the terms of the transaction, Amphenol will acquire MTS for $58.5 per share in cash, or approximately $1.7 billion, including the assumption of outstanding debt and liabilities, net of cash. Under the terms, the stock options and the restricted stock unit awards of MTS will be exchanged for the merger consideration. The transaction will be financed through a combination of borrowings under Amphenol's existing credit and commercial paper facilities as well as cash on hand. As a result of the transaction, MTS Systems Corporation will survive as a wholly owned subsidiary of Amphenol Corporation. Following the completion of the transaction, shares of MTS Systems Corporation will no longer be traded on the NASDAQ or any other public market. Upon termination, MTS Systems Corporation will be required to pay a termination fee of approximately $34.6 million to Amphenol.

As part of the transaction, the MTS team will be joining Amphenol. On December 18, 2020, executive officers of MTS Systems Corporation, Randy J. Martinez, President and Chief Executive Officer, Brian T. Ross, Executive Vice President and Chief Financial Officer, Steven B. Harrison, Executive Vice President and President, Test & Simulation and David T. Hore, Executive Vice President and President, Sensors entered into a retention agreement with MTS Systems Corporation. On December 17, 2020, following a recommendation from the Nominating and Governance Committee of the Board, Randy J. Martinez's appointment as President and Chief Executive Officer of MTS Systems by the Board was effective. Randy J. Martinez will remain a member of the Company's Board. The Board determined to appoint Randy J. Martinez as President and Chief Executive Officer during the pendency of the proposed acquisition by Amphenol Corporation as part of MTS Systems' efforts to continue to operate in ordinary course and to assist in maintaining stability within MTS Systems' workforce. From and after the Closing, Amphenol Corporation will make all determinations with respect to the officers of MTS Systems Corporation, including the position of Chief Executive Officer of MTS Systems Corporation.

The transaction is subject to certain conditions to closing, including certain regulatory approvals, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, receipt of any consents or approvals under the competition, antitrust, merger control or foreign investment laws of certain other jurisdictions and MTS shareholder approval, among other conditions. The Board of MTS Systems created a Special Finance and Operations Committee comprised of the chairman of the Board, the Chief Executive Officer and the chairpersons of each of the standing committees of the Board, which represented five of the seven members of the Board to assist MTS Systems in efficiently evaluating potential financing options and in responding to acquisition inquiries and shareholder activism campaigns. The transaction is not subject to a financing condition. As of January 28, 2021, MTS's shareholder meeting will be held on March 4, 2021. The transaction has been unanimously approved by the boards of both Amphenol and MTS. As of January 15, 2021, Federal Trade Commission has provided early termination of the waiting period under the Hart-Scott-Rodino for the transaction. As of March 4, 2021, MTS Systems shareholders approved the transaction. As of April 2, 2021, MTS Systems Corporation received all regulatory approvals. The transaction is expected to be consummated in the middle of 2021. As of April 2, 2021, the transaction is expected to close the merger on April 7, 2021. The acquisition of MTS is expected to be accretive to Amphenol's earnings per share in the first year after closing, with approximately $0.10 and $0.06 attributable to MTS's Sensors and Test & Simulation segments, respectively.

Centerview Partners LLC acted as the financial advisor and Charles K. Ruck, Robert M. Katz, Michael Egge, Jason Cruise, Max Hauser, Michelle Carpenter, Matthias Rubner, Christopher Norton, David Kuiper, Heather Deixler, Otto von Gruben, Betsy Mukamal, Jocelyn Noll and Kyle Jefcoat of Latham & Watkins LLP acted as the legal advisor to Amphenol Corporation. J.P. Morgan Securities LLC and Evercore Group L.L.C. acted as the co-financial advisors and fairness opinion providers to MTS. Scott R. Williams, Kai H. Liekefett, Benjamin A. Rosemergy, James D. Weiss, Teresa L. Reuter, Susan Fanning, Elizabeth K. McCloy, Heather M. Palmer, Sujit Raman and John T. Schaff of Sidley Austin LLP acted as the legal advisor to MTS. MacKenzie Partners acted as information agent to MTS. MTS will pay Mackenzie Partners a fee of approximately $0.025 million; J.P. Morgan a fee of approximately $18.3 million of which $4 million was paid upon the delivery of the opinion and the remainder will be payable upon the consummation of the merger; and Evercore a fee of approximately $18.275 million, of which $4 million was paid upon delivery of Evercore's opinion, and the balance of which will be payable contingent upon the consummation of the merger.

Amphenol Corporation (NYSE:APH) completed the acquisition of MTS Systems Corporation (NasdaqGS:MTSC) on April 7, 2021. MTS Sensors is expected to be $0.05 accretive to Amphenol's earnings per share in the first twelve months after closing.