JSE-listed Poynting Defence Specialists (DS) on Thursday said it had entered into a binding heads of agreement with the US-based Antenna Research Associates Inc. (ARA) to acquire 100 percent of the issued share capital of ARA for $5 million in cash.

Poynting DS made this acquisition because it wished to establish a larger market presence in the USA, it said on Thursday.

In addition, Poynting and ARA wish to combine their businesses in order to benefit from synergies between the companies and to grow their businesses into a significant business in the defence market.

Poynting DS primarily sells to clients in various countries in the world but with relatively limited sales in the USA. ARA is a company operating in similar market segments in the USA, the two companies said.

This means ARA is a logical extension of the Poynting DS business and all parties are excited about the apparent culture fit between the two organisations. On the date that the transaction becomes effective, current majority shareholder of ARA Pradeep Wahi will join the Poynting Holdings board and ARA CEO Logen Thiran will join the Poynting Group Exco. Wahi and Thiran are ARA’s shareholders.

Poynting DS designs and manufactures specialised broadband antennas and other related radio frequency (RF) products.

In terms of the deal, the heads of agreement are legally binding and the parties to these agreements will conclude a formal sale of shares agreement subject to the successful completion of a due diligence investigation.

The deal will be subject to the fulfilment of, inter alia, the requisite approvals required to implement the acquisition, including approval by the South African Reserve Bank and the USA Department of Defence.

The effective date of the acquisition is likely to be July 1 this year.