VSE CORP 8-K

What Happened
VSE Corporation (VSE) filed an 8-K on January 29, 2026 announcing it signed a Stock Purchase Agreement to acquire PAG HoldCo (Precision Aviation Group) for an up-front purchase price of $2.025 billion. The consideration is $1.75 billion in cash plus $275 million of newly issued Rollover Purchaser Class B shares, and an earnout of up to $125 million payable in cash, VSE common stock, or a mix if PAG meets 2026 profitability targets. The deal closing is subject to customary conditions, including Hart‑Scott‑Rodino clearance and foreign investment approvals in Australia and the U.K., and must occur by July 29, 2026 (extendable three months for regulatory approvals).

Key Details

• Purchase price: $2.025 billion upfront ( $1.75B cash + $275M rollover equity ) plus up to $125M contingent earnout.
• Financing: Commitment letter for new financing of up to $1.95 billion and backstop commitments for VSE’s existing credit facilities. Funding subject to customary conditions.
• Equity mechanics: Seller will receive Rollover Purchaser Shares convertible/exchangeable one-for-one into VSE common stock (subject to antidilution/change‑of‑control adjustments) and will enter into registration rights and staged lock‑ups (33.33% unlocked at 6 months, next 33.33% at 12 months, final 33.34% at 18 months; earnout shares locked 3–6 months after issuance).
• Closing condition & remedies: Agreement includes specific performance remedy and mutual termination rights; closing contingent on regulatory approvals.

Why It Matters
This is a material acquisition that would meaningfully increase VSE’s scale and likely its debt profile (VSE disclosed financing commitments to fund the transaction). For investors, the filing also provided preliminary, unaudited Q4 and full‑year 2025 results, which management cautioned are subject to change. Those estimates indicate continued revenue and profitability improvement and positive free cash flow for FY2025—figures investors may use to assess near‑term performance while monitoring financing progress, regulatory approvals, and integration risks.

Relevant preliminary financial ranges (unaudited estimates):

• Revenue: Q4 2025 $290M–$304M; FY 2025 $1,101M–$1,115M.
• Operating income: Q4 $27M–$34M; FY $84M–$91M.
• Adjusted EBITDA: Q4 $45M–$53M; FY $176M–$184M.
  All preliminary figures are subject to year‑end closing, audit review, and potential adjustments.