June 28, 2010 (FinancialWire) (Go to http://www.financialwire.net/?s=ftrdnwswnd for all of today’s featured news.) — The Allied Defense Group, Inc. (AMEX: ADG) said that it has signed a definitive purchase agreement with Chemring Group PLC (LSE: CHG). Chemring has agreed to acquire substantially all of the assets of The Allied Defense Group for $59.6 million in cash and the assumption of certain liabilities.

The closing of the transaction, which is subject to stockholder approval and other customary closing conditions, is expected within 90 days.

ADG also said that in connection with the execution of the purchase agreement, Chemring and ADG have terminated the merger agreement under which Chemring had agreed to acquire ADG in an all-cash transaction valued at $7.25 per share.  

On January 19, 2010, ADG said that it had signed a merger agreement with Chemring.  As disclosed in the proxy statement mailed to stockholders on March 11, 2010, ADG received a subpoena from the U.S. Department of Justice on January 19, 2010 requesting that ADG produce documents relating to its dealings with foreign governments.

As a result, a special meeting of stockholders to approve the merger with Chemring, originally scheduled for April 8, 2010, was postponed and then adjourned several times, most recently to June 30, 2010.

The DOJ recently advised ADG that it is conducting an industry-wide review, and therefore the DOJ's investigation of ADG will be ongoing. As a result, Chemring indicated that it was unwilling to consummate the merger pursuant to the terms of the merger agreement.

The signing of the purchase agreement and the termination of the merger agreement were the culmination of the parties' efforts to restructure the acquisition as a result of these developments.

In connection with the termination of the merger agreement, ADG is canceling the special meeting of stockholders to approve the merger with Chemring that was scheduled to be reconvened on June 30, 2010.

ADG said it will have no significant operating assets following the asset sale. The firm plans to continue its current efforts to reduce its operating costs, pay off its liabilities and resolve the matters relating to the DOJ's subpoena.

Virginia-based Allied Defense is a multinational defense company focused on the manufacture, sale and distribution of ammunition and ammunition-related products for use by the U.S. and foreign governments.

UK-based Chemring Group is a defense business that specializes in the manufacture of energetic material products, providing solutions for requirements in the pyrotechnics, explosive ordnance disposal, munitions and countermeasures markets.

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