VSE (VSEC) M&A announcement summary

Deal rationale and strategic fit

• Acquisition creates a scaled, pure-play aviation aftermarket platform with expanded global footprint, proprietary repair solutions, and broader technical capabilities.

• Broadens portfolio with diverse aftermarket capabilities, including MRO, distribution, component, engine, avionics services, and proprietary solutions.

• Diversifies end markets, serving over 10,000 customers across commercial, cargo, business, general aviation, rotorcraft, lessors, OEMs, and defense.

• Enhances resilience through market cycles, positions the combined entity as a mission-critical partner, and supports rapid component replacement and improved fleet readiness.

• Aligns with a focused aviation strategy, leveraging a proven integration playbook and history of successful M&A.

Financial terms and conditions

• Total upfront consideration of $2.025 billion: $1.75 billion in cash and $275 million in equity to the seller, subject to lockup periods and customary adjustments.

• Up to $125 million in contingent earnout based on 2026 adjusted EBITDA, payable in cash or equity.

• Upfront consideration represents ~13.5x PAG's expected 2025 adjusted EBITDA, including full run-rate synergies.

• Transaction supported by a fully committed bridge facility; equity issued to GenX/GenNx360 Capital Partners.

• Transaction expected to close in Q2 2026, subject to regulatory approvals and customary closing conditions.

Synergies and expected cost savings

• Over $15 million in annualized synergies targeted through phased integration, cross-selling, insourcing, procurement savings, and network optimization.

• Margin expansion anticipated, with consolidated adjusted EBITDA margin expected to exceed 20% over the next few years.

• Additional upside expected from operational efficiencies and supply chain improvements.