DEFM14A 1 d132491ddefm14a.htm DEFM14A DEFM14A
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SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES

EXCHANGE ACT OF 1934

Filed by the Registrant  

Filed by a Party other than the Registrant  

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to Section 240.14a-11c or Section 240.14a-12

 

TELEDYNE TECHNOLOGIES INCORPORATED

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
  No fee required.
 

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

  (1)   Title of each class of securities to which transaction applies:
   

 

  (2)   Aggregate number of securities to which transaction applies:
   

 

 

 

(3)

  Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
   

 

  (4)   Proposed maximum aggregate value of transaction:
   

 

  (5)   Total fee paid:
   

 

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)   Amount Previously Paid:
   

 

  (2)   Form, Schedule or Registration Statement No.:
   

 

  (3)   Filing Party:
   

 

  (4)   Date Filed:
   

 


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LOGO   LOGO

1049 Camino Dos Rios

Thousand Oaks, California 91360

 

27700 SW Parkway Avenue

Wilsonville, Oregon 97070

PROPOSED MERGER—YOUR VOTE IS VERY IMPORTANT

Dear Stockholders of Teledyne Technologies Incorporated and FLIR Systems, Inc.:

On January 4, 2021, Teledyne Technologies Incorporated, a Delaware corporation (“Teledyne”), and FLIR Systems, Inc., a Delaware corporation (“FLIR”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Teledyne will acquire FLIR. The Merger Agreement provides for a business combination in which Firework Merger Sub I, Inc., a Delaware corporation and wholly owned subsidiary of Teledyne (“Merger Sub I”), will merge with and into FLIR (the “First Merger”), with FLIR surviving as a wholly owned subsidiary of Teledyne, and (ii) immediately following the completion of the First Merger, FLIR, as the surviving corporation of the First Merger, will merge (such merger, the “Second Merger” and, together with the First Merger, the “Mergers”) with and into Firework Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of Teledyne (“Merger Sub II”), with Merger Sub II surviving the Second Merger and continuing as a wholly owned subsidiary of Teledyne. A copy of the Merger Agreement is included as Annex A to the accompanying joint proxy statement/prospectus.

Pursuant to the Merger Agreement, at the effective time of the First Merger (the “Effective Time”), each share of FLIR common stock, $0.01 par value per share (“FLIR Common Stock”), issued and outstanding immediately prior to the Effective Time (other than shares owned or held by (x) Teledyne or any of its subsidiaries, (y) in treasury or otherwise by FLIR or any of its subsidiaries and (z) any person who is entitled to demand and properly demands appraisal of such shares under Delaware law) will automatically convert into the right to receive (i) $28.00 in cash and (ii) 0.0718 shares of Teledyne common stock, $0.01 par value per share (“Teledyne Common Stock”). Teledyne Common Stock is traded on the New York Stock Exchange under the symbol “TDY,” and FLIR Common Stock is traded on the Nasdaq Global Select Market under the symbol “FLIR.”

Teledyne will hold a virtual special meeting of the Teledyne stockholders (the “Teledyne Special Meeting”) on May 13, 2021 at 9:00 a.m. Pacific Time to consider certain matters relating to the Mergers. At the Teledyne Special Meeting, Teledyne stockholders will be asked to consider and vote on (i) a proposal to approve the issuance of shares of Teledyne Common Stock in connection with the transactions contemplated by the Merger Agreement (the “Teledyne Share Issuance Proposal”), and (ii) a proposal to approve one or more adjournments of the Teledyne Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Teledyne Share Issuance Proposal at the time of the Teledyne Special Meeting.

The Teledyne board of directors recommends that Teledyne stockholders vote “FOR” each of the proposals presented at the Teledyne Special Meeting.

FLIR will hold a virtual special meeting of the FLIR stockholders (the “FLIR Special Meeting”) on May 13, 2021 at 9:00 a.m. Eastern Time to consider certain matters relating to the Mergers. At the FLIR Special Meeting, FLIR stockholders will be asked to consider and vote on (i) a proposal to adopt the Merger Agreement (the “FLIR Merger Proposal”), (ii) a proposal to approve, on a non-binding, advisory basis, the compensation that will or may become payable to FLIR’s named executive officers in connection with the Mergers, and (iii) a proposal to approve one or more adjournments of the FLIR Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the FLIR Merger Proposal at the time of the FLIR Special Meeting.

The FLIR board of directors recommends that FLIR stockholders vote “FOR” each of the proposals presented at the FLIR Special Meeting.

YOUR VOTE IS VERY IMPORTANT. The Mergers cannot be completed and the merger consideration will not be paid unless (i) Teledyne stockholders approve the Teledyne Share Issuance Proposal and (ii) FLIR stockholders approve the FLIR Merger Proposal. Whether or not you plan to virtually attend the Teledyne Special Meeting or the FLIR Special Meeting, as applicable, please vote as soon as possible over the Internet or by telephone as described in the accompanying joint proxy statement/prospectus or by completing the enclosed proxy card and mailing it in the enclosed envelope. Information about the special meetings, the Mergers and the other business to be considered at the respective special meetings is contained in the accompanying joint proxy statement/prospectus. You are urged to read the accompanying joint proxy statement/prospectus, including the annexes and the documents incorporated by reference, carefully and in its entirety.

In particular, you should carefully read “Risk Factors” beginning on page 32 for a discussion of certain of the material risks to consider in evaluating the proposals to be considered at the special meetings and how they will affect you.

Thank you for your cooperation and continued support.

 

 

LOGO

 

Robert Mehrabian

Executive Chairman

Teledyne Technologies Incorporated

  

LOGO

 

Earl R. Lewis

Chairman of the Board of Directors

FLIR Systems, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under the accompanying joint proxy statement/prospectus or passed upon the accuracy or adequacy of the disclosures in the accompanying joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This document and the accompanying joint proxy statement/prospectus is dated April 12, 2021 and is first being mailed to stockholders of record of Teledyne and to stockholders of record of FLIR on or about April 16, 2021.


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ADDITIONAL INFORMATION

The accompanying document is a joint proxy statement of Teledyne and FLIR and a prospectus of Teledyne for the shares of Teledyne Common Stock to be issued to FLIR stockholders as consideration in the Mergers. The accompanying joint proxy statement/prospectus incorporates by reference important business and financial information about Teledyne and FLIR from documents that are not included in or delivered with the accompanying joint proxy statement/prospectus. You can obtain the documents incorporated by reference into the accompanying joint proxy statement/prospectus (other than certain exhibits or schedules to these documents), without charge, by requesting copies of such documents in writing or by telephone from Teledyne or FLIR, respectively, at the following addresses and telephone numbers, or through the Securities and Exchange Commission website at www.sec.gov:

 

Teledyne Technologies Incorporated

1049 Camino Dos Rios

Thousand Oaks, California 91360

(805) 373-4545

Attention: Melanie S. Cibik, Senior Vice President, General Counsel, Chief Compliance Officer and Secretary

  

FLIR Systems, Inc.

1201 South Joyce Street,

Arlington, Virginia 22202

(703) 682-3400

Attention: Sonia Galindo, Senior Vice President, General Counsel, Secretary, and Chief Ethics & Compliance Officer

In addition, if you have any questions about the Merger Agreement, the Mergers, the issuance of shares of Teledyne Common Stock in the Mergers or the other transactions contemplated by the Merger Agreement, or if you need additional copies of the accompanying joint proxy statement/prospectus, you should contact:

 

Georgeson LLC

1290 Avenue of the Americas, 9th Floor

New York, NY 10104

(888) 660-8331

  

Okapi Partners

1212 Avenue of the Americas, 24th Floor

New York NY 10036

(844) 343-2643

To ensure timely delivery of these documents, any request should be made no later than May 5, 2021 to receive them before the Teledyne Special Meeting or the FLIR Special Meeting.

See “Where You Can Find More Information” beginning on page 205 of the accompanying joint proxy statement/prospectus for further information.


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LOGO

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 13, 2021

To Our Stockholders:

A special meeting of stockholders of Teledyne Technologies Incorporated, a Delaware corporation (“Teledyne”), will be held on May 13, 2021 at 9:00 a.m. Pacific Time via a live interactive audio webcast on the Internet (the “Teledyne Special Meeting”). You will be able to vote and submit your questions at www.meetingcenter.io/284418380 during the meeting. The meeting password is TDY2021. The Teledyne Special Meeting is being held for the purpose of considering and voting on the following proposals:

 

  1.

To approve the issuance (the “Teledyne Share Issuance Proposal”) of Teledyne common stock, $0.01 par value per share (“Teledyne Common Stock”), in connection with the transactions contemplated by the Agreement and Plan of Merger, dated as of January 4, 2021 (the “Merger Agreement”), by and among Teledyne, Firework Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of Teledyne (“Merger Sub I”), Firework Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of Teledyne (“Merger Sub II”), and FLIR Systems, Inc., a Delaware corporation (“FLIR”), pursuant to which Merger Sub I will merge with and into FLIR (the “First Merger”), and immediately thereafter FLIR, as the surviving corporation of the First Merger, will merge with and into Merger Sub II (the “Second Merger,” and together with the First Merger, the “Mergers”), with Merger Sub II surviving the Second Merger and continuing as a wholly owned subsidiary of Teledyne; and

 

  2.

To approve one or more adjournments of the Teledyne Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Teledyne Share Issuance Proposal at the time of the Teledyne Special Meeting (the “Teledyne Adjournment Proposal”).

Each of the proposals is more fully described in the accompanying joint proxy statement/prospectus of Teledyne and FLIR, which provides you with information about Teledyne, FLIR, the Teledyne Special Meeting, the Mergers, the Merger Agreement, the issuance of shares of Teledyne Common Stock in the Mergers and other related matters. The accompanying joint proxy statement/prospectus also includes, as Annex A, a copy of the Merger Agreement. Teledyne encourages you to carefully read the accompanying joint proxy statement/prospectus in its entirety, including the annexes and the documents incorporated by reference.

Only holders of shares of Teledyne Common Stock as of the close of business on April 9, 2021, which is the record date for the Teledyne Special Meeting, are entitled to receive notice of, attend and vote at the Teledyne Special Meeting and any adjournment or postponement thereof.

YOUR VOTE IS VERY IMPORTANT. The Mergers cannot be completed unless Teledyne stockholders approve the Teledyne Share Issuance Proposal. Whether or not you plan to virtually attend the Teledyne Special Meeting, please complete the enclosed proxy card and sign, date and return it promptly so that your shares will be represented at the Teledyne Special Meeting. You also may vote your shares over the Internet or by telephone by following the instructions included on the proxy card. Submitting your proxy in writing, over the Internet or by telephone will not prevent you from voting electronically at the virtual Teledyne Special Meeting.

Approval of each of the Teledyne Share Issuance Proposal and the Teledyne Adjournment Proposal requires the affirmative vote of a majority of the votes cast, electronically at the Teledyne Special Meeting or by proxy.

The Teledyne board of directors recommends that Teledyne stockholders vote “FOR” each of the proposals presented at the Teledyne Special Meeting.

By Order of the Teledyne Board of Directors,

 

LOGO

Robert Mehrabian

Executive Chairman


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LOGO

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD MAY 13, 2021

To Our Stockholders:

A special meeting of stockholders of FLIR Systems, Inc., a Delaware corporation (“FLIR”), will be held on May 13, 2021 at 9:00 a.m. Eastern Time via a live interactive audio webcast on the Internet (the “FLIR Special Meeting”). You will be able to vote and submit your questions during the meeting using the unique link that will be emailed to you after you register in advance at www.proxydocs.com/FLIR using the control number on your proxy card accompanying the joint proxy statement/prospectus. The FLIR Special Meeting is being held for the purpose of considering and voting on the following proposals:

 

  1.

To adopt the Agreement and Plan of Merger, dated as of January 4, 2021 (the “Merger Agreement”), by and among Teledyne Technologies Incorporated, a Delaware corporation (“Teledyne”), Firework Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of Teledyne (“Merger Sub I”), Firework Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of Teledyne (“Merger Sub II”), and FLIR, pursuant to which Merger Sub I will merge with and into FLIR (the “First Merger”), and immediately thereafter FLIR, as the surviving corporation of the First Merger, will merge with and into Merger Sub II (the “Second Merger,” and together with the First Merger, the “Mergers”), with Merger Sub II surviving the Second Merger and continuing as a wholly owned subsidiary of Teledyne (the “FLIR Merger Proposal”);

 

  2.

To approve, on a non-binding, advisory basis, the compensation that will or may become payable to FLIR’s named executive officers in connection with the Mergers (the “FLIR Advisory Executive Compensation Proposal”); and

 

  3.

To approve one or more adjournments of the FLIR Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the FLIR Merger Proposal at the time of the FLIR Special Meeting (the “FLIR Adjournment Proposal”).

Each of the proposals is more fully described in the accompanying joint proxy statement/prospectus of Teledyne and FLIR, which provides you with information about FLIR, Teledyne, the FLIR Special Meeting, the Mergers, the Merger Agreement and other related matters. The accompanying joint proxy statement/prospectus also includes, as Annex A, a copy of the Merger Agreement. FLIR encourages you to carefully read the accompanying joint proxy statement/prospectus in its entirety, including the annexes and the documents incorporated by reference.

Only holders of FLIR common stock, $0.01 par value per share (“FLIR Common Stock”), as of the close of business on April 7, 2021, which is the record date for the FLIR Special Meeting, are entitled to receive notice of, attend and vote at the FLIR Special Meeting and any adjournment or postponement thereof.

YOUR VOTE IS VERY IMPORTANT. The Mergers cannot be completed and the merger consideration will not be paid unless FLIR stockholders approve the FLIR Merger Proposal. Whether or not you plan to virtually attend the FLIR Special Meeting, please complete the enclosed proxy card and sign, date and return it promptly so that your shares will be represented at the FLIR Special Meeting. You also may vote your shares over the Internet or by telephone by following the instructions included on the proxy card. Submitting your proxy in writing, over the Internet or by telephone will not prevent you from voting electronically at the virtual FLIR Special Meeting.

Approval of the FLIR Merger Proposal requires the affirmative vote of a majority of the outstanding shares of FLIR Common Stock entitled to vote as of the close of business on the record date for the FLIR Special Meeting. Approval of each of the FLIR Advisory Executive Compensation Proposal and the FLIR Adjournment Proposal requires the affirmative vote of a majority of the votes cast, electronically at the FLIR Special Meeting or by proxy. Because the FLIR Advisory Executive Compensation Proposal is advisory, it will not be binding on FLIR, and failure to receive the vote required for approval will not change FLIR’s obligations to pay the compensation contemplated in connection with the Mergers pursuant to the terms of the applicable agreements and arrangements.

The FLIR board of directors recommends that FLIR stockholders vote “FOR” each of the proposals presented at the FLIR Special Meeting.

By Order of the FLIR Board of Directors,

 

LOGO

Earl R. Lewis

Chairman of the Board of Directors


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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE MERGERS, THE TELEDYNE SPECIAL MEETING AND THE FLIR SPECIAL MEETING

     1  

SUMMARY

     13  

The Companies

     13  

The Teledyne Special Meeting

     14  

The FLIR Special Meeting

     15  

The Mergers

     16  

Appraisal Rights of FLIR Stockholders

     16  

Treatment of FLIR Equity Awards

     16  

FLIR’s Reasons for the Mergers; Recommendation of FLIR’s Board of Directors

     17  

Opinion of FLIR’s Financial Advisor

     18  

Teledyne’s Reasons for the Mergers; Recommendation of Teledyne’s Board of Directors

     18  

Opinion of Teledyne’s Financial Advisor

     18  

Interests of FLIR’s Directors and Executive Officers in the Mergers

     19  

Listing of Shares of Teledyne Common Stock and Delisting and Deregistration of Shares of FLIR Common Stock

     19  

Conditions to Completion of the Mergers

     19  

Regulatory Approvals Required for the Mergers

     20  

FLIR Acquisition Proposals

     21  

FLIR Change in Recommendation; Termination for Superior Proposal

     22  

Teledyne Change in Recommendation

     22  

Termination of the Merger Agreement; Termination Fees

     23  

No Financing Condition; Financing

     24  

Litigation Related to the Mergers

     24  

Specific Performance; Remedies

     24  

Voting Agreement

     24  

Material U.S. Federal Income Tax Considerations

     25  

Accounting Treatment

     25  

Comparison of Stockholders Rights

     25  

Risk Factors

     25  

SUMMARY HISTORICAL FINANCIAL DATA OF TELEDYNE

     26  

SUMMARY HISTORICAL FINANCIAL DATA OF FLIR

     27  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

     29  

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

     30  

Market Prices

     30  

Dividends

     30  

RISK FACTORS

     32  

Risks Related to the Mergers

     32  

Risks Related to the Combined Company Following the Mergers

     38  

Risks Related to Teledyne

     43  

Risks Related to FLIR

     43  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     44  

THE COMPANIES

     46  

Teledyne Technologies Incorporated

     46  

FLIR Systems, Inc.

     46  

Firework Merger Sub I, Inc.

     48  

Firework Merger Sub II, LLC

     48  

THE TELEDYNE SPECIAL MEETING

     49  

TELEDYNE PROPOSAL NO. 1: THE TELEDYNE SHARE ISSUANCE PROPOSAL

     54  

 

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     Page  

TELEDYNE PROPOSAL NO. 2: THE TELEDYNE ADJOURNMENT PROPOSAL

     55  

THE FLIR SPECIAL MEETING

     56  

FLIR PROPOSAL NO. 1: THE FLIR MERGER PROPOSAL

     61  

FLIR PROPOSAL NO. 2: THE FLIR ADVISORY EXECUTIVE COMPENSATION PROPOSAL

     62  

FLIR PROPOSAL NO. 3: THE FLIR ADJOURNMENT PROPOSAL

     63  

THE MERGERS

     64  

General

     64  

Background of the Mergers

     64  

Certain Relationships between Teledyne and FLIR

     77  

Teledyne’s Reasons for the Mergers; Recommendation of the Teledyne Board of Directors

     78  

Unaudited Prospective Financial Information Used by the Teledyne Board of Directors and Teledyne’s Financial Advisor

     81  

Opinion of Teledyne’s Financial Advisor

     83  

FLIR’s Reasons for the Mergers; Recommendation of the FLIR Board of Directors

     96  

Unaudited Prospective Financial Information Used by the FLIR Board of Directors and FLIR’s Financial Advisor

     100  

Opinion of FLIR’s Financial Advisor

     104  

Regulatory Approvals Required for the Mergers

     111  

Dissenters’ or Appraisal Rights

     113  

Accounting Treatment

     113  

Listing of Shares of Teledyne Common Stock and Delisting and Deregistration of Shares of FLIR Common Stock

     114  

No Financing Condition

     114  

Litigation Related to the Mergers

     114  

THE MERGER AGREEMENT

     116  

Structure and Completion of the Mergers

     116  

Merger Consideration

     117  

Manner and Procedure for Exchanging Shares of FLIR Common Stock; No Fractional Shares

     117  

Dividends with Respect to Unexchanged Shares

     118  

Termination of Exchange Fund

     118  

No Liability

     118  

Appraisal Rights of FLIR Stockholders

     118  

Treatment of FLIR Equity Awards

     119  

Conditions to Completion of the Mergers

     120  

Definition of Material Adverse Effect

     121  

FLIR Acquisition Proposals

     122  

Special Meetings of FLIR Stockholders and Teledyne Stockholders; Recommendation of the FLIR Board; Recommendation of the Teledyne Board

     124  

FLIR Change in Recommendation; Termination for Superior Proposal

     125  

Teledyne Change in Recommendation

     125  

Efforts to Complete the Mergers

     127  

Conduct of Business Pending the Mergers

     129  

Employee Matters

     132  

Board of Directors and Executive Officers of Teledyne After the Mergers

     133  

Financing

     133  

Other Covenants and Agreements

     135  

Director and Officer Indemnification

     136  

Termination of the Merger Agreement

     137  

Termination Fees

     139  

Representations and Warranties

     140  

Expenses

     142  

 

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     Page  

Governing Law; Jurisdiction; Remedies; Waiver of Jury Trial

     143  

Amendments, Extensions and Waivers

     143  

BANK COMMITMENT LETTER, PERMANENT FINANCING AND FLIR EXISTING DEBT

     145  

THE FLIR STOCKHOLDER VOTING AGREEMENT

     147  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     148  

INTERESTS OF TELEDYNE’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGERS

     151  

INTERESTS OF FLIR’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGERS

     152  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     160  

DESCRIPTION OF TELEDYNE CAPITAL STOCK

     170  

General

     170  

No Preemptive, Redemption or Conversion Rights

     170  

Voting Rights

     170  

Dividend Rights

     170  

Board of Directors

     170  

No Action by Stockholder Consent

     171  

Power to Call Special Stockholder Meeting

     171  

Merger, Consolidation and Other Fundamental Changes

     171  

Liquidation, Dissolution or Similar Rights

     171  

Forum Selection Clause

     171  

COMPARISON OF STOCKHOLDER RIGHTS

     173  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     192  

APPRAISAL RIGHTS OF FLIR STOCKHOLDERS

     196  

STOCKHOLDER PROPOSALS

     201  

EXPERTS

     203  

LEGAL MATTERS

     203  

HOUSEHOLDING

     203  

WHERE YOU CAN FIND MORE INFORMATION

     205  

Annex A     Agreement and Plan of Merger

  

Annex B     Opinion of Evercore Group L.L.C.

  

Annex C     Opinion of Goldman Sachs  & Co. LLC

  

Annex D     Section  262 of the Delaware General Corporation Law

  

 

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QUESTIONS AND ANSWERS ABOUT THE MERGERS, THE TELEDYNE SPECIAL MEETING AND THE FLIR SPECIAL MEETING

The following are answers to some questions that you, as a stockholder of Teledyne Technologies Incorporated (“Teledyne”) or FLIR Systems, Inc. (“FLIR”), may have regarding the proposed transaction between Teledyne and FLIR and the proposals to be considered at their respective special meetings. This section does not provide all the information that might be important to you with respect to the proposed transaction between Teledyne and FLIR. Teledyne and FLIR urge you to carefully read the remainder of this joint proxy statement/prospectus, including the annexes and the documents incorporated by reference in this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus.

 

Q:

Why am I receiving this joint proxy statement/prospectus?

 

A:

Teledyne and FLIR have entered into an Agreement and Plan of Merger, dated as of January 4, 2021 (the “Merger Agreement”), by and among Teledyne, Firework Merger Sub I, Inc., a wholly owned subsidiary of Teledyne (“Merger Sub I”), Firework Merger Sub II, LLC, a wholly owned subsidiary of Teledyne (“Merger Sub II”), and FLIR. The Merger Agreement provides, among other things, that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub I will merge with and into FLIR, with FLIR surviving the merger as a wholly owned subsidiary of Teledyne (the “First Merger”). The Merger Agreement also provides that, immediately following the effective time of the First Merger (the “Effective Time”), FLIR, as the surviving corporation of the First Merger, will merge with and into Merger Sub II (the “Second Merger,” and together with the First Merger, the “Mergers”), with Merger Sub II surviving the Second Merger and continuing as a wholly owned subsidiary of Teledyne. A copy of the Merger Agreement is included in this joint proxy statement/prospectus as Annex A.

The Mergers cannot be completed unless, among other things, (i) the Teledyne stockholders approve the issuance of shares of Teledyne common stock, $0.01 par value per share (“Teledyne Common Stock”), in connection with the transactions contemplated by the Merger Agreement and (ii) the FLIR stockholders adopt the Merger Agreement.

Teledyne and FLIR are using this document as a joint proxy statement to solicit proxies from Teledyne stockholders and FLIR stockholders, respectively, in connection with proposals relating to the Mergers. Teledyne is also using this document as a prospectus by which Teledyne will offer and issue Teledyne Common Stock in connection with the Mergers.

Each of Teledyne and FLIR will hold separate special meetings of stockholders to obtain the approvals for the proposals described in this joint proxy statement/prospectus in connection with the Mergers. These special meetings are referred to herein as the “Teledyne Special Meeting” and the “FLIR Special Meeting,” respectively. This joint proxy statement/prospectus contains important information about the Mergers and the other proposals being voted on at the special meetings. You should read it carefully and in its entirety. The enclosed materials allow you to have your shares voted by proxy without attending your virtual special meeting. Your vote is important. We encourage you to submit your proxy as soon as possible.

 

Q:

What am I being asked to vote on?

 

A:

At the Teledyne Special Meeting, Teledyne stockholders will be asked to consider and vote on the following proposals:

 

  1.

To approve the issuance of shares of Teledyne Common Stock in connection with the transactions contemplated by the Merger Agreement (the “Teledyne Share Issuance Proposal”); and

 

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  2.

To approve one or more adjournments of the Teledyne Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Teledyne Share Issuance Proposal at the time of the Teledyne Special Meeting (the “Teledyne Adjournment Proposal”).

At the FLIR Special Meeting, FLIR stockholders will be asked to consider and vote on the following proposals:

 

  1.

To adopt the Merger Agreement (the “FLIR Merger Proposal”);

 

  2.

To approve, on a non-binding, advisory basis, the compensation that will or may become payable to FLIR’s named executive officers in connection with the Mergers (the “FLIR Advisory Executive Compensation Proposal”); and

 

  3.

To approve one or more adjournments of the FLIR Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the FLIR Merger Proposal at the time of the FLIR Special Meeting (the “FLIR Adjournment Proposal”).

 

Q:

Why are Teledyne and FLIR proposing the Mergers?

 

A:

The board of directors of Teledyne (the “Teledyne Board”) and the board of directors of FLIR (the “FLIR Board”) believe that the Mergers will provide substantial strategic and financial benefits to the companies, the Teledyne stockholders and the FLIR stockholders. To review the reasons for the Mergers, see “The Mergers—Teledyne’s Reasons for the Mergers; Recommendation of the Teledyne Board of Directors” on page 78 of this joint proxy statement/prospectus and “The Mergers—FLIR’s Reasons for the Mergers; Recommendation of the FLIR Board of Directors” on page 96 of this joint proxy statement/prospectus for more information.

 

Q:

What will I receive in the Mergers?

 

A:

Teledyne stockholders. If the Mergers are completed, you will not receive any merger consideration and will continue to hold the shares of Teledyne Common Stock that you currently hold. Following the Mergers, Teledyne Common Stock will continue to be traded on the New York Stock Exchange (the “NYSE”).

FLIR stockholders. If the First Merger is completed, for each share of FLIR common stock, $0.01 par value per share (“FLIR Common Stock”), you hold that is issued and outstanding immediately prior to the Effective Time, you will have the right to receive: (i) $28.00 in cash and (ii) 0.0718 shares of Teledyne Common Stock (the “merger consideration”). No fractional shares of Teledyne Common Stock will be issued in the First Merger, and holders of FLIR Common Stock will receive cash in lieu of any fractional shares of Teledyne Common Stock.

As a result of the Mergers, based on the number of shares of Teledyne Common Stock and FLIR Common Stock outstanding as of April 9, 2021, the last practicable trading day before the date of this joint proxy statement/prospectus, current Teledyne stockholders are expected to own approximately 79.7% of Teledyne Common Stock outstanding immediately following the Mergers, and current FLIR stockholders are expected to own approximately 20.3% of Teledyne Common Stock outstanding immediately following the Mergers, each on a fully diluted basis (without giving effect to any shares of Teledyne Common Stock that may be held by FLIR stockholders prior to the Mergers).

 

Q:

What happens if the market price of Teledyne Common Stock or FLIR Common Stock changes before completion of the Mergers?

 

A:

In connection with the Mergers, FLIR stockholders will receive $28.00 in cash and 0.0718 shares of Teledyne Common Stock for each share of FLIR Common Stock they hold. No change will be made to the

 

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  number of shares of Teledyne Common Stock that FLIR stockholders will receive as part of the merger consideration due to fluctuations in the market price of either Teledyne Common Stock or FLIR Common Stock. As a result, the number of shares of Teledyne Common Stock that FLIR stockholders will receive as consideration in the Mergers is fixed and will not change. However, the value of the portion of the merger consideration consisting of Teledyne Common Stock may fluctuate between the date of this joint proxy statement/prospectus and the completion of the Mergers based upon the market value of Teledyne Common Stock. Any fluctuation in the market price of Teledyne Common Stock after the date of this joint proxy statement/prospectus and before the Effective Time will impact the value of the shares of Teledyne Common Stock that FLIR stockholders will receive.

 

Q:

How will the Mergers affect the FLIR equity awards?

 

A:

FLIR Stock Options. At the Effective Time, each option to purchase FLIR Common Stock (each, a “FLIR Stock Option”), whether vested or unvested, that is outstanding and unexercised immediately prior to the Effective Time, will automatically be cancelled and converted into the right to receive an amount in cash equal to the product of (i) the excess, if any, of (x) $56.00 over (y) the exercise price of such FLIR Stock Option, multiplied by (ii) the number of shares of FLIR Common Stock subject to such FLIR Stock Option, less applicable tax withholdings. In the event the per share exercise price of a FLIR Stock Option is equal to or greater than $56.00, such FLIR Stock Option will be cancelled as of the Effective Time without any payment to the holder.

FLIR Service-based Restricted Stock Units. At the Effective Time, each FLIR restricted stock unit subject only to service-based vesting requirements (each, a “FLIR RSU”) that was granted prior to the date of the Merger Agreement and is outstanding immediately prior to the Effective Time will automatically vest and be cancelled and converted into the right to receive $56.00 in cash in respect of each share of FLIR Common Stock subject to such FLIR RSU.

FLIR Service-based Restricted Stock Units Awarded in 2021. At the Effective Time, each FLIR RSU awarded at any time following the date of the Merger Agreement (each, a “2021 FLIR RSU”) that is outstanding immediately prior to the Effective Time and is held by (i) any director of FLIR, (ii) any officer of FLIR who is subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to FLIR or (iii) any executive of FLIR who has a “change of control” agreement or participates in FLIR’s Change in Control Severance Benefit Plan (each of (i), (ii) and (iii), an “Accelerated RSU Holder”) will automatically vest and be cancelled and converted into the right to receive $56.00 in cash in respect of each share of FLIR Common Stock subject to such 2021 FLIR RSU.

At the Effective Time, each 2021 FLIR RSU that is outstanding immediately prior to the Effective Time and is not held by an Accelerated RSU Holder will be assumed by Teledyne and automatically converted into a restricted stock unit with respect to a number of shares of Teledyne Common Stock (each, an “Adjusted RSU”) equal to the product obtained by multiplying (x) the total number of shares of FLIR Common Stock subject to such 2021 FLIR RSU immediately prior to the Effective Time by (y) 0.1436, with any fractional shares to be paid in cash. Upon assumption and conversion, each such Adjusted RSU will otherwise be subject to the same terms and conditions as were applicable to the corresponding 2021 FLIR RSU before the Effective Time.

FLIR Performance-based Restricted Stock Units. At the Effective Time, each FLIR restricted stock unit subject to both service-based and performance-based vesting requirements (each, a “FLIR PRSU”) that was granted prior to the date of the Merger Agreement and is outstanding immediately prior to the Effective Time will automatically vest and be cancelled and converted into the right to receive $56.00 in cash in respect of each share of FLIR Common Stock subject to such FLIR PRSU. The number of shares of FLIR Common Stock underlying each FLIR PRSU that will become vested will be equal to the greater of (i) the

 

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target number of shares set forth in the award agreement for such FLIR PRSU and (ii) the number of shares that would be achieved based on the actual achievement of the applicable performance goals if the applicable performance period ended on December 31, 2020, the last day of FLIR’s calendar quarter immediately preceding the first public announcement of the transactions contemplated by the Merger Agreement.

 

Q:

How does the Teledyne Board recommend that I vote at the Teledyne Special Meeting?

 

A:

The Teledyne Board recommends that Teledyne’s stockholders vote “FOR” the Teledyne Share Issuance Proposal and “FOR” the Teledyne Adjournment Proposal.

 

Q:

How does the FLIR Board recommend that I vote at the FLIR Special Meeting?

 

A:

The FLIR Board recommends that FLIR’s stockholders vote “FOR” the FLIR Merger Proposal, “FOR” the FLIR Advisory Executive Compensation Proposal and “FOR” the FLIR Adjournment Proposal.

 

Q:

When and where are the special meetings?

 

A:

The Teledyne Special Meeting will be held on May 13, 2021, at 9:00 a.m. Pacific Time via a live interactive audio webcast on the Internet. You will be able to vote and submit your questions at www.meetingcenter.io/284418380 during the meeting.

The FLIR Special Meeting will be held on May 13, 2021, at 9:00 a.m. Eastern Time via a live interactive audio webcast on the Internet. Upon completing your registration at www.proxydocs.com/FLIR using the control number on the FLIR proxy card accompanying this joint proxy statement/prospectus, you will receive further instructions via email, including your unique link that will allow you to access the FLIR Special Meeting and permit you to submit your questions during the meeting.

 

Q:

What do I need to do now?

 

A:

After you have carefully read this joint proxy statement/prospectus and have decided how you wish to vote your shares, please vote your shares promptly so that your shares are represented and voted at your virtual special meeting. If you hold your shares in your name as a stockholder of record, you must complete, sign, date and mail your proxy card in the enclosed postage-paid return envelope as soon as possible or vote by Internet or phone, as described in this joint proxy statement/prospectus. If you hold your shares in “street name” through a bank, broker or other nominee, you must direct your bank, broker or other nominee how to vote in accordance with the instructions you have received from your bank, broker or other nominee. “Street name” stockholders who wish to vote electronically at the special meeting will need to register in advance to virtually attend the Teledyne Special Meeting or the FLIR Special Meeting, as applicable.

 

Q:

What constitutes a quorum for the Teledyne Special Meeting?

 

A:

The presence at the Teledyne Special Meeting, in person or by proxy, of holders of a majority of the outstanding shares of Teledyne Common Stock entitled to vote at the Teledyne Special Meeting will constitute a quorum for the transaction of business. Virtual attendance at the Teledyne Special Meeting constitutes presence in person for quorum purposes at the Teledyne Special Meeting. Abstentions and broker non-votes, if any, will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

 

Q:

What constitutes a quorum for the FLIR Special Meeting?

 

A:

The presence at the FLIR Special Meeting, in person or by proxy, of holders of a majority of the outstanding shares of FLIR Common Stock entitled to vote at the FLIR Special Meeting will constitute a quorum for the transaction of business. Virtual attendance at the FLIR Special Meeting constitutes presence in person for

 

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  quorum purposes at the FLIR Special Meeting. Abstentions and broker non-votes, if any, will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

 

Q:

What is the vote required to approve each proposal?

 

A:

Teledyne Special Meeting. Approval of each of the Teledyne Share Issuance Proposal and the Teledyne Adjournment Proposal requires the affirmative vote of a majority of the votes cast, electronically at the Teledyne Special Meeting or by proxy, by stockholders of Teledyne.

FLIR Special Meeting. Approval of the FLIR Merger Proposal requires the affirmative vote of a majority of the outstanding shares of FLIR Common Stock entitled to vote on the proposal. If you mark “ABSTAIN” on your proxy card or when voting by Internet or phone, fail to submit a proxy, fail to vote at the FLIR Special Meeting or fail to instruct your bank, broker or other nominee with respect to the FLIR Merger Proposal, it will have the same effect as a vote “AGAINST” the proposal. Approval of each of the FLIR Advisory Executive Compensation Proposal and the FLIR Adjournment Proposal requires the affirmative vote of a majority of votes cast, electronically at the FLIR Special Meeting or by proxy, by stockholders of FLIR.

 

Q:

Why is my vote important?

 

A:

The Mergers will not be completed unless Teledyne stockholders approve the Teledyne Share Issuance Proposal and FLIR stockholders approve the FLIR Merger Proposal. If you do not return your proxy, it will be more difficult for Teledyne or FLIR to obtain the necessary quorum to hold their respective special meetings.

In addition, if you are a FLIR stockholder, your failure to submit a proxy or vote electronically at the FLIR Special Meeting, your failure to instruct your bank, broker or other nominee how to vote, or your abstention will have the same effect as a vote “AGAINST” the FLIR Merger Proposal.

The Teledyne Board and the FLIR Board recommend that you vote “FOR” each of the proposals presented at the respective special meetings.

 

Q:

Who can vote at the special meetings?

 

A:

Teledyne stockholders. Holders of shares of Teledyne Common Stock as of the close of business on April 9, 2021, which is the record date for the Teledyne Special Meeting (the “Teledyne Record Date”), are eligible to vote at the Teledyne Special Meeting.

FLIR stockholders. Holders of shares of FLIR Common Stock as of the close of business on April 7, 2021, which is the record date for the FLIR Special Meeting (the “FLIR Record Date”), are eligible to vote at the FLIR Special Meeting.

 

Q:

How do I attend the special meetings?

 

A:

Due to the public health impact from the novel coronavirus (“COVID-19”) and to protect the well-being of its stockholders, employees and other meeting participants, neither Teledyne nor FLIR will hold an in-person special meeting. Instead, each will hold a virtual special meeting.

Teledyne stockholders. To access the virtual Teledyne Special Meeting, go to www.meetingcenter.io/284418380 before the scheduled start time. Online access to the meeting will begin at 8:45 a.m. Pacific Time. All stockholders of Teledyne, including stockholders of record and stockholders who hold their

 

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shares through banks, brokers or other nominees, are invited to attend the virtual Teledyne Special Meeting. If you are a holder of record of Teledyne Common Stock at the close of business on the Teledyne Record Date (i.e., you hold your shares in your own name as reflected in the records of Teledyne’s transfer agent, Computershare Trust Company, N.A. (“Computershare”)), you can attend the meeting by accessing www.meetingcenter.io/284418380 and entering the 16-digit control number on the Teledyne proxy card accompanying this joint proxy statement/prospectus. The meeting password is TDY2021.

If you were a beneficial holder of Teledyne Common Stock at the close of business on the Teledyne Record Date (i.e. you hold your shares in “street name” through an intermediary, such as a bank or broker), you must register in advance to virtually attend and vote at the Teledyne Special Meeting. To register, you must obtain a legal proxy, executed in your favor, from the holder of record and submit proof of your legal proxy reflecting the number of shares of Teledyne Common Stock you held as of the Teledyne Record Date, along with your name and email address, to Computershare. Please forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m. Eastern Time on May 6, 2021. You will then receive a confirmation of your registration, with a control number, by email from Computershare. At the time of the meeting, go to www.meetingcenter.io/284418380 and enter your control number and the meeting password, which is TDY2021.

FLIR stockholders. To access the virtual FLIR Special Meeting, register at www.proxydocs.com/FLIR before the scheduled start time using the control number on the FLIR proxy card accompanying this joint proxy statement/prospectus. Online access to the meeting will begin fifteen minutes prior to the meeting’s scheduled start time at 8:45 a.m. Eastern Time. All stockholders of FLIR, including stockholders of record and stockholders who hold their shares through banks, brokers or other nominees, are invited to attend the FLIR Special Meeting. If you are a holder of record of FLIR Common Stock at the close of business on the FLIR Record Date (i.e., you hold your shares in your own name as reflected in the records of FLIR’s transfer agent, Computershare), you can attend the meeting by registering at www.proxydocs.com/FLIR by using the control number on the FLIR proxy card accompanying this joint proxy statement/prospectus. Upon completing your registration, you will receive further instructions via email, including your unique link that will allow you to access the FLIR Special Meeting.

If you were a beneficial holder of FLIR Common Stock at the close of business on the FLIR Record Date (i.e. you hold your shares in “street name” through an intermediary, such as a bank or broker), you must contact your bank, broker or other nominee and request a document called a “legal proxy” to be eligible to vote during the meeting. To attend the FLIR Special Meeting, you must register in advance of the meeting at www.proxydocs.com/FLIR using the control number on the voting instruction form accompanying this joint proxy statement/prospectus. Upon completing your registration, you will receive further instructions via email, including your unique link that will allow you to access the FLIR Special Meeting.

 

Q:

How can I vote my shares of Teledyne Common Stock?

 

A:

You may vote your shares of Teledyne Common Stock virtually at the Teledyne Special Meeting or by submitting a proxy by mail or telephone or via the Internet. Even if you plan to virtually attend the Teledyne Special Meeting, Teledyne recommends that you submit your proxy. If you submit your proxy, you may change your vote if you virtually attend and vote at the Teledyne Special Meeting.

Stockholders of record (i.e., stockholders who hold Teledyne Common Stock in such stockholders’ own name, as opposed to through a bank, broker or other nominee), at the close of business on the Teledyne Record Date, may vote virtually at the Teledyne Special Meeting or by proxy. This means that you may use the enclosed proxy card to instruct the persons named as proxies how to vote your shares of Teledyne Common Stock. If you properly complete, sign and date your proxy card or properly submit your voting instructions by telephone or via the Internet, your shares of Teledyne Common Stock will be voted in accordance with your instructions. The named proxies will vote all Teledyne Common Stock at the

 

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Teledyne Special Meeting for which proxies have been properly submitted (whether by mail, telephone or via the Internet) and not revoked. Stockholders of record have three ways to vote by proxy:

 

  1.

Internet. You can submit your proxy via the Internet by following the instructions on your proxy card.

 

  2.

Telephone. You can submit your proxy by telephone by following the instructions on your proxy card.

 

  3.

Mail. You can submit your proxy by mail by signing, dating and mailing your proxy card in the postage-paid envelope included with this joint proxy statement/prospectus.

If you sign and return your proxy card but do not mark your card to instruct the proxies how to vote your shares of Teledyne Common Stock on each proposal, your shares of Teledyne Common Stock will be voted as recommended by the Teledyne Board.

The deadline for voting by telephone is 11:59 p.m. Eastern Time on May 12, 2021. All votes, other than votes made electronically at the Teledyne Special Meeting, must be received by 11:59 p.m. Eastern Time on May 12, 2021.

If you hold your shares in “street name” through an intermediary, such as a bank or broker other nominee, then your bank, broker or other nominee will send you a voting instruction form to use in voting your shares of Teledyne Common Stock. The availability of telephone, mail and Internet voting depends on the voting procedures of your bank, broker or other nominee. Please follow the instructions on the voting instruction form your bank, broker or other nominee sends you.

If you hold common stock in the Teledyne Technologies Incorporated 401(k) Plan, you must provide the trustee of the Teledyne Technologies Incorporated 401(k) Plan with your voting instructions in advance of the meeting. You may do so by returning your voting instructions by mail, or submitting them by telephone or electronically using the Internet. You cannot vote your shares yourself at the Teledyne Special Meeting; the trustee is the only one who can vote your shares. The trustee will vote your shares as you have instructed. If the trustee does not receive your instructions, your shares generally will be voted in proportion to the way the other plan participants voted. To allow sufficient time for voting by the trustee, your voting instructions must be received by 11:59 p.m. Eastern Time on May 10, 2021.

 

Q:

How can I vote my shares of FLIR Common Stock?

 

A:

You may vote your shares of FLIR Common Stock virtually at the FLIR Special Meeting or by submitting a proxy by mail or telephone or via the Internet. Even if you plan to attend the FLIR Special Meeting virtually, FLIR recommends that you submit your proxy. If you submit your proxy, you may change your vote if you virtually attend and vote at the FLIR Special Meeting.

Stockholders of record (i.e., stockholders who hold FLIR Common Stock in such stockholders’ own name, as opposed to through a bank, broker or other nominee), at the close of business on the FLIR Record Date, may vote virtually at the FLIR Special Meeting or by proxy. This means that you may use the enclosed proxy card to instruct the persons named as proxies how to vote your shares of FLIR Common Stock. If you properly complete, sign and date your proxy card or properly submit your voting instructions by telephone or via the Internet, your shares of FLIR Common Stock will be voted in accordance with your instructions. The named proxies will vote all FLIR Common Stock at the FLIR Special Meeting for which proxies have been properly submitted (whether by mail, telephone or via the Internet) and not revoked. Stockholders of record have three ways to vote by proxy:

 

  1.

Internet. You can submit your proxy via the Internet by following the instructions on your proxy card.

 

  2.

Telephone. You can submit your proxy by telephone by following the instructions on your proxy card.

 

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  3.

Mail. You can submit your proxy by mail by signing, dating and mailing your proxy card in the postage-paid envelope included with this joint proxy statement/prospectus.

If you sign and return your proxy card but do not mark your card to instruct the proxies how to vote your shares of FLIR Common Stock on each proposal, your shares of FLIR Common Stock will be voted as recommended by the FLIR Board.

The deadline for voting via the Internet or by telephone is 11:59 p.m. Eastern Time on May 12, 2021.

If you hold your shares in “street name” through an intermediary, such as a bank or broker other nominee, then your bank, broker or other nominee will send you a voting instruction form to use in voting your shares of FLIR Common Stock. The availability of telephone, mail and Internet voting depends on the voting procedures of your bank, broker or other nominee. Please follow the instructions on the voting instruction form your bank, broker or other nominee sends you.

If you hold shares in FLIR’s 401(k) Plan, you must provide the trustee of FLIR’s 401(k) Plan with your voting instructions by 11:59 p.m. Eastern Time on May 10, 2021.

 

Q:

If my shares of common stock are held in “street name” by my bank, broker or other nominee, will my bank, broker or other nominee automatically vote my shares for me?

 

A:

Teledyne stockholders. No. If your shares of Teledyne Common Stock are held in “street name,” your bank, broker or other nominee will vote your shares of Teledyne Common Stock only if you provide instructions on how to vote by filling out the voting instruction form sent to you by your bank, broker or other nominee with this joint proxy statement/prospectus. Under stock exchange rules, banks, brokers and other nominees who hold shares of Teledyne Common Stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers and other nominees are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine,” without specific instructions from the beneficial owner. Broker non-votes are shares held by a bank, broker or other nominee that are represented at the Teledyne Special Meeting, but with respect to which the bank, broker or other nominee is not instructed by the beneficial owner of such shares to vote on the particular proposal and the bank, broker or other nominee does not have discretionary voting power on such proposal. Teledyne believes that the Teledyne Share Issuance Proposal and the Teledyne Adjournment Proposal are “non-routine” proposals and therefore your bank, broker or other nominee cannot vote your shares of Teledyne Common Stock without your specific voting instructions. Because the only proposals for consideration at the Teledyne Special Meeting are non-routine proposals, it is not expected that there will be any broker non-votes at the Teledyne Special Meeting. However, if there are any broker non-votes, they will have no effect on the outcome of the Teledyne Share Issuance Proposal or the Teledyne Adjournment Proposal.

FLIR stockholders. No. If your shares of FLIR Common Stock are held in “street name,” your bank, broker or other nominee will vote your shares of FLIR Common Stock only if you provide instructions on how to vote by filling out the voting instruction form sent to you by your bank, broker or other nominee with this joint proxy statement/prospectus. Under stock exchange rules, banks, brokers and other nominees who hold shares of FLIR Common Stock in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokers and other nominees are not allowed to exercise their voting discretion with respect to the approval of matters determined to be “non-routine,” without specific instructions from the beneficial owner. Broker non-votes are shares held by a bank, broker or other nominee that are represented at the FLIR Special Meeting, but with respect to which the bank, broker or other nominee is not instructed by the beneficial owner of such shares to vote on the particular proposal and the bank, broker or other nominee does not have discretionary voting power on such proposal. FLIR believes that the FLIR Merger Proposal, the FLIR Advisory Executive Compensation Proposal and the FLIR Adjournment Proposal are “non-routine” proposals and therefore your bank, broker or other nominee cannot vote your shares of FLIR Common Stock without your specific voting instructions. Because the only

 

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proposals for consideration at the FLIR Special Meeting are non-routine proposals, it is not expected that there will be any broker non-votes at the FLIR Special Meeting. However, if there are any broker non-votes, they will have (i) the same effect as a vote “AGAINST” the FLIR Merger Proposal and (ii) no effect on the outcome of the FLIR Advisory Executive Compensation Proposal or the FLIR Adjournment Proposal.

 

Q:

Can I change my vote?

 

A:

Teledyne stockholders. Yes. If you are a holder of record of Teledyne Common Stock, you may revoke any proxy at any time before it is voted by (i) signing and returning a proxy card with a later date, (ii) if you voted by telephone, submitting subsequent voting instructions by telephone before the closing of those voting facilities at 11:59 p.m. Eastern Time on May 12, 2021, (iii) delivering a written revocation letter to Melanie S. Cibik, Teledyne’s Senior Vice President, General Counsel, Chief Compliance Officer and Secretary, or (iv) virtually attending the Teledyne Special Meeting and voting electronically at the Teledyne Special Meeting. Attendance at the Teledyne Special Meeting by itself will not automatically revoke your proxy or change your vote. A revocation or later-dated proxy received by Teledyne after the vote will not affect the vote. The mailing address of Ms. Cibik, Teledyne’s corporate secretary, is: Teledyne Technologies Incorporated, 1049 Camino dos Rios, Thousand Oaks, California 91360, Attention: Melanie S. Cibik, Senior Vice President, General Counsel, Chief Compliance Officer and Secretary. If you hold your shares in “street name” through a bank, broker or other nominee, you should contact your bank, broker or other nominee to revoke your proxy or change your vote. If you hold shares in the Teledyne Technologies Incorporated 401(k) Plan, your voting instructions to the trustee of the Teledyne Technologies Incorporated 401(k) Plan must be received by 11:59 p.m. Eastern Time on May 10, 2021.

FLIR stockholders. Yes. If you are a holder of record of FLIR Common Stock, you may revoke any proxy at any time before it is voted by (i) signing and returning a proxy card with a later date, (ii) if you voted via the Internet or by telephone, submitting subsequent voting instructions via the Internet or by telephone before the closing of those voting facilities at 11:59 p.m. Eastern Time on May 12, 2021, (ii) delivering a written revocation letter to Sonia Galindo, Senior Vice President, General Counsel, Secretary, and Chief Ethics & Compliance Officer at FLIR Systems, Inc., 1201 South Joyce Street, Arlington, VA 22202, or (iv) virtually attending the FLIR Special Meeting and voting electronically at the FLIR Special Meeting. Attendance at the FLIR Special Meeting by itself will not automatically revoke your proxy or change your vote. A revocation or later-dated proxy received by FLIR after the vote will not affect the vote. If you hold your shares in “street name” through a bank, broker or other nominee, you should contact your bank, broker or other nominee to revoke your proxy or change your vote. If you hold shares in FLIR’s 401(k) Plan, your voting instructions to the trustee of FLIR’s 401(k) Plan must be received by 11:59 p.m. Eastern Time on May 10, 2021.

 

Q:

What happens if I fail to submit a proxy or I abstain from voting?

 

A:

Teledyne stockholders. If you fail to submit a proxy or fail to instruct your bank, broker or other nominee to vote, assuming a quorum is present at the Teledyne Special Meeting, it will have no effect on the outcome of the Teledyne Share Issuance Proposal or the Teledyne Adjournment Proposal. An abstention occurs when a Teledyne stockholder returns a proxy with an “abstain” instruction or virtually attends the Teledyne Special Meeting and abstains from voting. Abstentions, if any, will have no effect on the outcome of the Teledyne Share Issuance Proposal or the Teledyne Adjournment Proposal.

FLIR stockholders. If you fail to submit a proxy or fail to instruct your bank, broker or other nominee to vote, assuming a quorum is present at the FLIR Special Meeting, it will have no effect on the outcome of the FLIR Advisory Executive Compensation Proposal or the FLIR Adjournment Proposal, but it will have the same effect as votes “AGAINST” the FLIR Merger Proposal. An abstention occurs when a FLIR stockholder returns a proxy with an “abstain” instruction or virtually attends the FLIR Special Meeting and abstains from voting. Abstentions, if any, will have no effect on the outcome of the FLIR Advisory Executive Compensation Proposal or the FLIR Adjournment Proposal but will have the same effect as votes “AGAINST” the FLIR Merger Proposal.

 

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Q:

What are the U.S. federal income tax consequences of the Mergers to FLIR stockholders?

 

A:

The Mergers, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Provided that the Mergers qualify as a reorganization, holders of FLIR Common Stock will not recognize any gain or loss for U.S. federal income tax purposes on the exchange of shares of FLIR Common Stock for shares of Teledyne Common Stock in the Mergers, except with respect to the cash component of the merger consideration and any cash received instead of fractional shares of Teledyne Common Stock.

For further information, see “Material U.S. Federal Income Tax Considerations” on page 148 of this joint proxy statement/prospectus.

The U.S. federal income tax consequences described above may not apply to all holders of FLIR Common Stock. Your tax consequences will depend on your individual situation. Accordingly, we strongly urge you to consult your independent tax advisor for a full understanding of the particular tax consequences of the Mergers to you.

 

Q:

Are FLIR stockholders entitled to appraisal or dissenters’ rights?

 

A:

Yes. Pursuant to Section 262 of the Delaware General Corporation Law (the “DGCL”), FLIR stockholders who do not vote in favor of adoption of the Merger Agreement, who continuously hold their shares of FLIR Common Stock through the Effective Time and who otherwise comply in all respects with the applicable requirements of Section 262 of the DGCL have the right to seek appraisal of the fair value of their shares of FLIR Common Stock, as determined by the Delaware Court of Chancery, if the Mergers are consummated. See “Appraisal Rights of FLIR Stockholders” beginning on page 196 of this joint proxy statement/prospectus.

 

Q:

If I am a FLIR stockholder, should I send in my FLIR stock certificates now?

 

A:

No. Please do not send in your FLIR stock certificates with your proxy. After the completion of the Mergers, an exchange agent appointed by Teledyne and reasonably acceptable to FLIR will send you instructions for exchanging FLIR stock certificates for the merger consideration.

 

Q:

What should I do if I hold my shares of FLIR Common Stock in book-entry form?

 

A:

You are not required to take any special additional actions if your shares of FLIR Common Stock are not represented by a certificate and are instead held in book-entry form. After the completion of the Mergers, the exchange agent will send you instructions for converting your book-entry shares into the merger consideration, including shares of Teledyne Common Stock in book-entry form and any cash to be paid instead of fractional shares in the Mergers.

 

Q:

What should I do if I receive more than one set of voting materials?

 

A:

Teledyne and FLIR stockholders may receive more than one set of voting materials, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold shares of Teledyne Common Stock and/or FLIR Common Stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold such shares. If you are a holder of record of Teledyne Common Stock or FLIR Common Stock and your shares are registered in more than one name, you will receive more than one proxy card. In addition, if you are a holder of both Teledyne Common Stock and FLIR Common Stock, you will receive one or more separate proxy cards or voting instruction cards for each company. Please complete, sign, date and return each proxy card and voting instruction card that you receive or otherwise follow the voting instructions set forth in this joint proxy statement/prospectus to ensure that you vote every share of Teledyne Common Stock and/or FLIR Common Stock that you own.

 

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Q:

Whom may I contact if I cannot locate my FLIR stock certificate(s)?

 

A:

If you are unable to locate your original FLIR stock certificate(s), you should contact FLIR’s transfer agent, Computershare, at (888) 256-2315 (toll-free) or (201) 680-6578 (international).

 

Q:

When do you expect to complete the Mergers?

 

A:

Teledyne and FLIR expect to complete the Mergers by the second or the third quarter of 2021. However, neither Teledyne nor FLIR can assure you of when or if the Mergers will be completed. Teledyne and FLIR must first obtain the approval of Teledyne stockholders and FLIR stockholders for the Teledyne Share Issuance Proposal and the FLIR Merger Proposal, respectively, as well as obtain necessary antitrust and other regulatory approvals and satisfy certain other closing conditions. See “The Merger Agreement—Conditions to Completion of the Mergers” on page 120 of this joint proxy statement/prospectus for more information regarding conditions to the completion of the Mergers.

 

Q:

What happens if the Mergers are not completed?

 

A:

If the Mergers are not completed, FLIR stockholders will not receive any consideration for their shares of FLIR Common Stock in connection with the Mergers. Instead, FLIR will remain an independent, public company and FLIR Common Stock will continue to be traded on the Nasdaq Global Select Market (“NASDAQ”). In addition, if the Merger Agreement is terminated in certain circumstances, Teledyne or FLIR may be required to pay a termination fee. See “The Merger Agreement—Termination of the Merger Agreement” on page 137 of this joint proxy statement/prospectus for a complete discussion of the circumstances under which a termination fee will be required to be paid.

 

Q:

What will happen if the FLIR Advisory Executive Compensation Proposal is not approved?

 

A:

Certain of FLIR’s executive officers are entitled, pursuant to the terms of their existing compensation arrangements with FLIR, to receive certain payments in connection with the Mergers. If the Mergers are completed, Merger Sub II, as successor to FLIR, will be contractually obligated to make these payments to these executives under certain circumstances. Accordingly, even if the FLIR stockholders do not approve the FLIR Advisory Executive Compensation Proposal, the compensation will nevertheless be payable, subject to the terms and conditions of the arrangements and the Merger Agreement. FLIR is seeking your approval of these payments on an advisory, non-binding basis in order to comply with Section 14A of the Exchange Act and related rules of the Securities and Exchange Commission (“SEC”).

 

Q:

Where can I find the voting results of the special meetings?

 

A:

The preliminary voting results will be announced at each of the special meetings. In addition, within four business days following the Teledyne Special Meeting and the FLIR Special Meeting, Teledyne and FLIR each will disclose the preliminary or, if available, final voting results of their respective special meetings on a Current Report on Form 8-K filed with the SEC. If preliminary voting results are disclosed, Teledyne and FLIR will file an amended Current Report on Form 8-K with the SEC to disclose final voting results within four business days following certification of the final voting results.

 

Q:

Is the completion of the Mergers subject to a financing condition?

 

A:

No. The completion of the Mergers is not subject to any financing condition.

 

Q:

What is the amount of debt to be incurred by Teledyne in connection with the Mergers?

 

A:

Teledyne intends to fund the cash portion of the consideration for the Mergers with a combination of cash on hand and borrowings. Teledyne has obtained an aggregate of $4.0 billion in permanent financing through (i) a new Term Loan Credit Agreement with several banks and other institutions from time to time party

 

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  thereto as lenders and Bank of America, N.A. as administrative agent, under which Teledyne will borrow $1.0 billion at the closing of the Mergers and (ii) the proceeds received from an offering of several series of new notes totaling approximately $3.0 billion. Teledyne also expects to assume FLIR’s $500.0 million remaining principal amount of existing 2.5% Senior Notes due 2030. The permanent financing replaced the financing commitment that Teledyne obtained in connection with entering into the Merger Agreement for a $4.5 billion senior unsecured 364-day bridge facility (the “Bridge Facility”) pursuant to a commitment letter (the “Commitment Letter”) with BofA Securities, Inc. and Bank of America, N.A.

 

Q:

Are there any risks that I should consider in deciding whether to vote for the adoption of the Merger Agreement?

 

A:

Yes. You should read and carefully consider the risk factors set forth in the “Risk Factors” section beginning on page 32 of this joint proxy statement/prospectus. You also should read and carefully consider the risk factors of Teledyne and FLIR contained in the documents that are incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus.

 

Q:

Who can answer any questions I may have about the Mergers or the transactions contemplated by the Merger Agreement?

 

A:

If you have any questions about the Mergers, the Share Issuance or the transactions contemplated by the Merger Agreement, or if you need additional copies of this joint proxy statement/prospectus or the documents incorporated by reference, you should contact:

If you are a Teledyne stockholder:

Teledyne Technologies Incorporated

1049 Camino Dos Rios

Thousand Oaks, California 91360

(805) 373-4545

Attention: Melanie S. Cibik, Senior Vice President,

General Counsel, Chief Compliance Officer and Secretary

or

Georgeson LLC

1290 Avenue of the Americas, 9th Floor

New York, NY 10104

(888) 660-8331

If you are a FLIR stockholder:

FLIR Systems, Inc.

1201 South Joyce Street,

Arlington, Virginia 22202

Attention: Sonia Galindo, Senior Vice President, General Counsel,

Secretary, and Chief Ethics & Compliance Officer

(703) 682-3400

Okapi Partners

1212 Avenue of the Americas, 24th Floor

New York NY 10036

Phone: (212) 297-0720

(844) 343-2643

 

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SUMMARY

This summary highlights selected information from this joint proxy statement/prospectus. It may not contain all of the information that is important to you. You are urged to read carefully the entire joint proxy statement/prospectus and the other documents referred to or incorporated by reference into this joint proxy statement/prospectus in order to fully understand the Merger Agreement and the Mergers. See “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus. Each item in this summary refers to the page of this joint proxy statement/prospectus on which that subject is discussed in more detail.

The Companies (Beginning on page 46)

Teledyne Technologies Incorporated

Teledyne provides enabling technologies for industrial growth markets that require advanced technology and high reliability. These markets include aerospace and defense, factory automation, air and water quality environmental monitoring, electronics design and development, oceanographic research, deepwater oil and gas exploration and production, medical imaging and pharmaceutical research. Teledyne’s products include digital imaging sensors, cameras and systems within the visible, infrared and X-ray spectra, monitoring and control instrumentation for marine and environmental applications, harsh environment interconnects, electronic test and measurement equipment, aircraft information management systems, and defense electronics and satellite communication subsystems. Teledyne also supplies engineered systems for defense, space, environmental and energy applications.

Teledyne, a Delaware corporation, spun off from Allegheny Technologies Incorporated as an independent public company on November 29, 1999. Teledyne Common Stock is traded on the NYSE under the symbol “TDY.” The principal executive offices of Teledyne are located at 1049 Camino Dos Rios, Thousand Oaks, California 91360; its telephone number is (805) 373-4545; and its website is www.teledyne.com. The information contained in, or that can be accessed through, Teledyne’s website is not part this joint proxy statement/prospectus or the documents incorporated by reference.

This joint proxy statement/prospectus incorporates important business and financial information about Teledyne from other documents that are not included in or delivered with this joint proxy statement/prospectus. For a list of the documents that are incorporated by reference in this joint proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus.

FLIR Systems, Inc.

FLIR designs, develops, markets, and distributes solutions that detect people, objects and substances that may not be perceived by human senses and improve the way people interact with the world around them. FLIR brings these innovative technologies into daily life in ways that help save lives and livelihoods. FLIR technologies include thermal imaging systems, visible-light imaging systems, locater systems, measurement and diagnostic systems, and advanced threat-detection solutions.

Founded in 1978, FLIR is a pioneer in advanced sensors and integrated sensor systems that enable the gathering, measurement, and analysis of critical information through a wide variety of applications in government, industrial and commercial markets worldwide. FLIR offers a broad range of infrared, also known as thermal, imaging solutions, with products that range from professional-use thermal camera smartphone accessories to highly advanced aircraft-mounted imaging systems for military and search and rescue applications, with products in between serving a multitude of markets, customers, and applications. As the cost of thermal imaging technology has decreased, FLIR’s opportunities to increase the adoption of thermal technology and create new markets for the technology have expanded. In order to better serve the customers in these markets,



 

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FLIR has augmented its thermal product offerings with complementary sensing technologies, such as visible imaging, radar, laser, sonar, chemical sensing, and environmental sensing technologies.

FLIR Systems, Inc. is a Delaware corporation. FLIR Common Stock is traded on NASDAQ under the symbol “FLIR.” The principal executive offices of FLIR are located at 27700 SW Parkway Avenue, Wilsonville, Oregon 97070, and the telephone number at this location is (503) 498-3547. Information about FLIR is available on FLIR’s website at www.flir.com. The information contained in, or that can be accessed through, FLIR’s website is not part of this joint proxy statement/prospectus or the documents incorporated by reference.

This joint proxy statement/prospectus incorporates important business and financial information about FLIR from other documents that are not included in or delivered with this joint proxy statement/prospectus. For a list of documents that are incorporated by reference into this joint proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus.

Firework Merger Sub I, Inc.

Merger Sub I is a wholly owned subsidiary of Teledyne. Merger Sub I was formed solely for the purpose of completing the Mergers. Merger Sub I has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the Mergers.

Merger Sub I was incorporated in the State of Delaware on December 30, 2020. The principal executive offices of Merger Sub I are located at 1049 Camino Dos Rios, Thousand Oaks, California 91360, and its telephone number is (805) 373-4545.

Firework Merger Sub II, LLC

Merger Sub II is a wholly owned subsidiary of Teledyne. Merger Sub II was formed solely for the purpose of completing the Mergers. Merger Sub II has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the Mergers. At the effective time of the Second Merger, it is expected that as the surviving company its name will be changed to “Teledyne FLIR, LLC.”

Merger Sub II was formed in the State of Delaware on December 30, 2020. The principal executive offices of Merger Sub II are located at 1049 Camino Dos Rios, Thousand Oaks, California 91360, and its telephone number (805) 373-4545.

The Teledyne Special Meeting (Beginning on page 49)

The Teledyne Special Meeting will be held at 9:00 a.m. Pacific Time on May 13, 2021.

Only holders of Teledyne Common Stock as of the close of business on April 9, 2021, the Teledyne Record Date, are entitled to receive notice of, attend and vote at the Teledyne Special Meeting. If you own shares of Teledyne Common Stock that are registered in the name of someone else, such as a bank, broker or other nominee, you need to direct that person to vote those shares or obtain an authorization from them to vote the shares yourself electronically at the Teledyne Special Meeting. As of the close of business on the Teledyne Record Date, there were 37,063,413 shares of Teledyne Common Stock outstanding and entitled to vote, held by approximately 2,621 holders of record.

The Teledyne Special Meeting is being held for Teledyne stockholders to consider and vote on the following proposals:

 

   

Teledyne Proposal No. 1—The Teledyne Share Issuance Proposal. To approve the Share Issuance in connection with the transactions contemplated by the Merger Agreement.



 

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Teledyne Proposal No. 2—The Teledyne Adjournment Proposal. To approve one or more adjournments of the Teledyne Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Teledyne Share Issuance Proposal at the time of the Teledyne Special Meeting.

Approval of each of the Teledyne Share Issuance Proposal and the Teledyne Adjournment Proposal requires the affirmative vote of a majority of the votes cast, electronically at the Teledyne Special Meeting or by proxy.

At the Teledyne Record Date, directors and executive officers of Teledyne beneficially owned, in the aggregate, approximately 1,182,999 issued and outstanding shares of Teledyne Common Stock, representing approximately 3.2% of the shares of Teledyne Common Stock outstanding on that date. Teledyne expects that the directors and executive officers of Teledyne will vote all of the shares of Teledyne Common Stock they are entitled to vote (i)FOR” the Teledyne Share Issuance Proposal and (ii) “FOR” the Teledyne Adjournment Proposal.

The FLIR Special Meeting (Beginning on page 56)

The FLIR Special Meeting will be held at 9:00 a.m. Eastern Time on May 13, 2021.

Only holders of FLIR Common Stock as of the close of business on April 7, 2021, the FLIR Record Date, are entitled to receive notice of, attend and vote at the FLIR Special Meeting. If you own shares of FLIR Common Stock that are registered in the name of someone else, such as a bank, broker or other nominee, you need to direct that person to vote those shares or obtain an authorization from them to vote the shares yourself electronically at the FLIR Special Meeting. As of the close of business on the FLIR Record Date, there were 131,425,675 shares of FLIR Common Stock outstanding and entitled to vote, held by approximately 174 holders of record.

The FLIR Special Meeting is being held for FLIR stockholders to consider and vote on the following proposals:

 

   

FLIR Proposal No. 1—The FLIR Merger Proposal. To adopt the Merger Agreement.

 

   

FLIR Proposal No. 2—The FLIR Advisory Executive Compensation Proposal. To approve, on a non-binding, advisory basis, the compensation that will or may become payable to FLIR’s named executive officers in connection with the Mergers.

 

   

FLIR Proposal No. 3—The FLIR Adjournment Proposal. To approve one or more adjournments of the FLIR Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the FLIR Merger Proposal at the time of the FLIR Special Meeting.

Approval of the FLIR Merger Proposal requires the affirmative vote of a majority of the outstanding shares of FLIR Common Stock entitled to vote as of the close of business on the FLIR Record Date. Approval of each of the FLIR Advisory Executive Compensation Proposal and the FLIR Adjournment Proposal requires the affirmative vote of a majority of the votes cast, electronically at the FLIR Special Meeting or by proxy.

At the FLIR Record Date, directors and executive officers of FLIR beneficially owned and were entitled to vote, in the aggregate, approximately 1,160,579 issued and outstanding shares of FLIR Common Stock, representing approximately 0.9% of the shares of FLIR Common Stock outstanding on that date. FLIR expects the directors and executive officers of FLIR to vote all of the shares of FLIR Common Stock they are entitled to vote (i)FOR” the FLIR Merger Proposal, (ii) “FOR” the FLIR Advisory Executive Compensation Proposal and (iii) “FOR” the FLIR Adjournment Proposal.



 

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The Mergers (Beginning on page 64)

Teledyne, Merger Sub I, Merger Sub II and FLIR have entered into the Merger Agreement. Subject to the terms and conditions of the Merger Agreement and in accordance with applicable law, at the Effective Time, Merger Sub I will merge with and into FLIR, with FLIR continuing as the surviving corporation and a wholly owned subsidiary of Teledyne, and immediately following the First Merger, FLIR, as the surviving corporation of the First Merger, will merge with and into Merger Sub II, with Merger Sub II continuing as the surviving company and a wholly owned subsidiary of Teledyne. In connection with the Mergers, FLIR Common Stock will be delisted from NASDAQ and deregistered under the Exchange Act.

If the Mergers are completed, the Merger Agreement provides that, at the Effective Time, each share of FLIR Common Stock that is issued and outstanding immediately prior to the Effective Time (other than shares owned or held (x) by Teledyne or any of its subsidiaries, (y) in treasury or otherwise by FLIR or any of its subsidiaries and (z) by any person who is entitled to demand and properly demands appraisal of such shares under Delaware law) will automatically convert into the right to receive (i) $28.00 in cash and (ii) 0.0718 shares of Teledyne Common Stock. No fractional shares of Teledyne Common Stock will be issued in the Mergers, and instead, holders of shares of FLIR Common Stock will receive cash in lieu of any fractional shares of Teledyne Common Stock.

A copy of the Merger Agreement is attached as Annex A to this joint proxy statement/prospectus. You should read the Merger Agreement carefully because it is the legal document that governs the Mergers.

Appraisal Rights of FLIR Stockholders (Beginning on page 196)

Pursuant to Section 262 of the DGCL, FLIR stockholders who do not vote in favor of adoption of the Merger Agreement, who continuously hold their shares of FLIR Common Stock through the Effective Time and who otherwise comply in all respects with the applicable requirements of Section 262 of the DGCL have the right to seek appraisal of the fair value of their shares of FLIR Common Stock, as determined by the Delaware Court of Chancery, if the Mergers are consummated. The “fair value” of shares of FLIR Common Stock as determined by the Delaware Court of Chancery could be greater than, the same as, or less than the value of the merger consideration that a FLIR stockholder would otherwise be entitled to receive under the terms of the Merger Agreement.

FLIR stockholders who wish to exercise the right to seek an appraisal of their shares must so advise FLIR by submitting a written demand for appraisal in the form described in this joint proxy statement/prospectus prior to the vote to adopt the Merger Agreement, and must otherwise follow the procedures prescribed by Section 262 of the DGCL. A person having a beneficial interest in shares of FLIR Common Stock held of record in the name of another person, such as a bank, broker or other nominee, must act promptly to cause the record holder to follow the steps summarized in this joint proxy statement/prospectus and in a timely manner to perfect appraisal rights. In view of the complexity of Section 262 of the DGCL, FLIR stockholders who may wish to pursue appraisal rights should consult their own legal and financial advisors. See “Appraisal Rights of FLIR Stockholders” beginning on page 196.

Teledyne stockholders do not have any appraisal or dissenter’s rights under the DGCL in connection with the Teledyne Special Meeting or the Share Issuance.

Treatment of FLIR Equity Awards (Beginning on page 119)

FLIR Stock Options. At the Effective Time, each FLIR Stock Option, whether vested or unvested, that is outstanding and unexercised will automatically be cancelled and converted into the right to receive an amount in



 

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cash equal to the product of (i) the excess, if any, of (x) $56.00 over (y) the exercise price of such FLIR Stock Option, multiplied by (ii) the number of shares of FLIR Common Stock subject to such FLIR Stock Option, less applicable tax withholdings. In the event the per-share exercise price of a FLIR Stock Option is equal to or greater than $56.00, such FLIR Stock Option will be cancelled as of the Effective Time without any payment to the holder.

FLIR Service-based Restricted Stock Units. At the Effective Time, each FLIR RSU that was granted prior to the date of the Merger Agreement and is outstanding immediately prior to the Effective Time will automatically vest and be cancelled and converted into the right to receive $56.00 in cash in respect of each share of FLIR Common Stock subject to such FLIR RSU.

FLIR Service-based Restricted Stock Units Awarded in 2021. At the Effective Time, each 2021 FLIR RSU that is outstanding immediately prior to the Effective Time and is held by an Accelerated RSU Holder will automatically vest and be cancelled and converted into the right to receive $56.00 in cash in respect of each share of FLIR Common Stock subject to such 2021 FLIR RSU.

At the Effective Time, each 2021 FLIR RSU that is outstanding immediately prior to the Effective Time and is not held by an Accelerated RSU Holder will be assumed by Teledyne and automatically converted into an Adjusted RSU with respect to a number of shares of Teledyne Common Stock equal to the product obtained by multiplying (x) the total number of shares of FLIR Common Stock subject to such 2021 FLIR RSU immediately prior to the Effective Time by (y) 0.1436, with any fractional shares to be paid in cash. Upon assumption and conversion, each such Adjusted RSU will otherwise be subject to the same terms and conditions as were applicable to the corresponding 2021 FLIR RSU before the Effective Time.

FLIR Performance-based Restricted Stock Units. At the Effective Time, each FLIR PRSU that was granted prior to the date of the Merger Agreement and is outstanding immediately prior to the Effective Time will automatically vest and be cancelled and converted into the right to receive $56.00 in cash in respect of each share of FLIR Common Stock subject to such FLIR PRSU. The number of shares of FLIR Common Stock underlying each FLIR PRSU that will become vested will be equal to the greater of (i) the target number of shares set forth in the award agreement for such PRSU and (ii) the number of shares that would be achieved based on the actual achievement of the applicable performance goals if the applicable performance period ended on December 31, 2020, the last day of FLIR’s calendar quarter immediately preceding the first public announcement of the transactions contemplated by the Merger Agreement.

FLIR’s Reasons for the Mergers; Recommendation of FLIR’s Board of Directors (Beginning on page 96)

After careful consideration, on January 3, 2021, the FLIR Board (i) determined that it was fair to, advisable and in the best interests of FLIR and its stockholders for FLIR to enter into the Merger Agreement and effect the Mergers and other transactions contemplated thereby, (ii) authorized, approved and adopted the execution, delivery and performance of the Merger Agreement and the transactions contemplated thereby (including the Mergers) on behalf of FLIR, (iii) directed that the FLIR Merger Proposal, the FLIR Advisory Executive Compensation Proposal and the FLIR Adjournment Proposal be submitted to the FLIR stockholders for consideration, and (iv) recommended that FLIR stockholders vote in favor of such proposals. Accordingly, the FLIR Board recommends that FLIR stockholders vote “FOR” the FLIR Merger Proposal, “FOR” the FLIR Advisory Executive Compensation Proposal and “FOR” the FLIR Adjournment Proposal.

For a summary of the factors considered by the FLIR Board in reaching its decision to adopt the Merger Agreement and approve the consummation of the transactions contemplated by the Merger Agreement, including the Mergers, as well as the FLIR Board’s reasons for, and certain risks related to, the Mergers, see the section titled “The Mergers—FLIR’s Reasons for the Mergers; Recommendation of the FLIR Board of Directors” beginning on page 96 in this joint proxy statement/prospectus.



 

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Opinion of FLIR’s Financial Advisor (Beginning on page 104)

On January 3, 2021, at a meeting of the FLIR Board, Goldman Sachs & Co. LLC, financial advisor to FLIR (“Goldman Sachs”), rendered its oral opinion, subsequently confirmed in writing that, as of the date of the written opinion and based upon and subject to the factors and assumptions set forth therein, the consideration to be paid to the holders (other than Teledyne and its affiliates) of shares of FLIR Common Stock, pursuant to the Merger Agreement, was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated January 4, 2021, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C. Goldman Sachs provided advisory services and its opinion for the information and assistance of the FLIR Board in connection with its consideration of the transaction. The Goldman Sachs opinion does not constitute a recommendation as to how any holder of shares of FLIR Common Stock should vote with respect to the transaction or any other matter.

For a description of the opinion that the FLIR Board received from Goldman Sachs, see “The Mergers—Opinion of FLIR’s Financial Advisor” on page 104 of this joint proxy statement/prospectus.

Teledynes Reasons for the Mergers; Recommendation of Teledynes Board of Directors (Beginning on page 78)

After careful consideration, on January 2, 2021, the Teledyne Board adopted resolutions (i) approving the Merger Agreement, the Mergers, the Share Issuance and the other transactions contemplated by the Merger Agreement, (ii) determining that the terms of the Mergers and the other transactions contemplated by the Merger Agreement are advisable and fair to and in the best interests of Teledyne and its stockholders, (iii) directing that the Teledyne Share Issuance Proposal be submitted to the stockholders of Teledyne for approval and (iv) recommending that Teledyne’s stockholders vote in favor of the Teledyne Share Issuance Proposal, subject to receipt and review by a transaction committee formed by the Teledyne Board (the “Teledyne Transaction Committee”) of the fairness opinion of Teledyne’s financial advisor. On January 4, 2021, the Teledyne Transaction Committee, on behalf of the Teledyne Board, received and reviewed the fairness opinion and the Teledyne Transaction Committee approved the Merger Agreement. Accordingly, the Teledyne Board recommends that Teledyne stockholders vote “FOR” the approval of the Teledyne Share Issuance Proposal and “FOR” the Teledyne Adjournment Proposal.

For a summary of the factors considered by the Teledyne Board in reaching its decision to adopt the Merger Agreement and approve the consummation of the transactions contemplated by the Merger Agreement, including the Mergers and the Teledyne Share Issuance Proposal, as well as the Teledyne Board’s reasons for, and certain risks related to, the Mergers, see the section titled “The Mergers—Teledyne’s Reasons for the Mergers; Recommendation of the Teledyne Board of Directors” beginning on page 78 in this joint proxy statement/prospectus.

Opinion of Teledyne’s Financial Advisor (Beginning on page 83)

Teledyne retained Evercore Group L.L.C. (“Evercore”) to act as its financial advisor in connection with the Mergers. As part of this engagement, the Teledyne Board requested that Evercore evaluate the fairness, from a financial point of view, to Teledyne of the merger consideration to be paid to the holders of FLIR Common Stock in the Mergers. At a meeting of the Teledyne Transaction Committee held on January 4, 2021, Evercore rendered to the Teledyne Board its oral opinion, confirmed by delivery of a written opinion dated the same date, to the effect that, as of that date and based upon and subject to the assumptions, limitations, qualifications and conditions described in Evercore’s opinion, the merger consideration of $28.00 in cash and 0.0718 shares of



 

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Teledyne Common Stock to be paid to the holders of FLIR Common Stock in the Mergers was fair, from a financial point of view, to Teledyne.

The full text of the written opinion of Evercore, dated as of January 4, 2021, which sets forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken in rendering its opinion, is attached as Annex B to this joint proxy statement/prospectus and is incorporated herein by reference. You are encouraged to read this opinion carefully and in its entirety. Evercore’s opinion was addressed to, and provided for the information and benefit of, the Teledyne Board (in its capacity as such) in connection with its evaluation of the proposed Mergers. The opinion does not constitute a recommendation to the Teledyne Board or to any other persons in respect of the Mergers, including as to how any holder of shares of FLIR Common Stock or Teledyne Common Stock should vote or act in respect of the Mergers. Evercore’s opinion does not address the relative merits of the Mergers as compared to other business or financial strategies that might be available to Teledyne, nor does it address the underlying business decision of Teledyne to engage in the Mergers.

Interests of FLIRs Directors and Executive Officers in the Mergers (Beginning on page 152)

Non-employee directors and executive officers of FLIR have financial interests in the Mergers that may be different from or in addition to their interests as stockholders and the interests of FLIR stockholders generally. These interests include, among others, the accelerated vesting of outstanding equity awards pursuant to the Merger Agreement, potential severance benefits and other payments and rights to ongoing indemnification and insurance coverage. The members of the FLIR Board were aware of and considered those interests, among other matters, in evaluating and approving the Merger Agreement and the Mergers, and in recommending to the FLIR stockholders that the Merger Agreement be adopted. One director on the FLIR Board, Michael T. Smith, also serves on the Teledyne Board. Mr. Smith was recused from the meeting of the FLIR Board on January 3, 2021 during which the FLIR Board approved Merger Agreement and the Mergers, and was otherwise not involved in the FLIR Board’s deliberations or consideration of the Mergers. It is expected that Mr. Smith will continue to serve on the Teledyne Board after the consummation of the Mergers. See “Interests of FLIR’s Directors and Executive Officers in the Mergers” beginning on page 152 of this joint proxy statement/prospectus for a more detailed description of these interests.

Listing of Shares of Teledyne Common Stock and Delisting and Deregistration of Shares of FLIR Common Stock (Beginning on page 114)

Application will be made to list the shares of Teledyne Common Stock to be issued in the Mergers on the NYSE, on which Teledyne Common Stock is currently traded. If the Mergers are completed, FLIR Common Stock will no longer be listed on the NASDAQ and will be deregistered under the Exchange Act.

Conditions to Completion of the Mergers (Beginning on page 120)

As more fully described in this joint proxy statement/prospectus and in the Merger Agreement, the obligation of each of Teledyne, FLIR, Merger Sub I and Merger Sub II to complete the First Merger is subject to the satisfaction (or, to the extent permitted by applicable law, waiver) of a number of conditions, including the following:

 

   

the approval by FLIR stockholders of the FLIR Merger Proposal;

 

   

the approval by Teledyne stockholders of the Teledyne Share Issuance Proposal;

 

   

the absence of any temporary restraining order, preliminary or permanent injunction, order or other legal restraint or prohibition preventing or making illegal the closing of the Mergers;



 

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the effectiveness of the registration statement under the Securities Act of 1933, as amended (the “Securities Act”) for the shares of Teledyne Common Stock being issued in the Mergers (of which this joint proxy statement/prospectus forms a part) and the absence of any stop order suspending that effectiveness or any proceedings initiated or threatened in writing for that purpose;

 

   

approval for the listing on the NYSE of the shares of Teledyne Common Stock to be issued in the Mergers, subject to official notice of issuance;

 

   

subject to certain materiality qualifiers, the accuracy of the representations and warranties made in the Merger Agreement by FLIR (in the case of Teledyne, Merger Sub I and Merger Sub II’s obligations to complete the First Merger) or Teledyne, Merger Sub I and Merger Sub II (in the case of FLIR’s obligation to complete the First Merger);

 

   

the performance in all material respects by FLIR (in the case of Teledyne, Merger Sub I and Merger Sub II’s obligations to complete the First Merger) or by Teledyne, Merger Sub I and Merger Sub II (in the case of FLIR’s obligation to complete the First Merger) of the obligations required to be performed by it or them at or prior to the Effective Time;

 

   

the receipt of a certificate signed by an executive officer of FLIR (in the case of Teledyne, Merger Sub I and Merger Sub II’s obligations to complete the First Merger) or Teledyne (in the case of FLIR’s obligation to complete the First Merger), in each case as to the satisfaction of the applicable conditions described in the preceding two bullets;

 

   

the absence since the date of the Merger Agreement of a material adverse effect on FLIR (in the case of Teledyne, Merger Sub I and Merger Sub II’s obligations to complete the First Merger) or Teledyne (in the case of FLIR’s obligation to complete the First Merger) (see “The Merger Agreement—Definition of Material Adverse Effect” beginning on page 121 of this joint proxy statement/prospectus for the definition of “material adverse effect”);

 

   

(i) the expiration or termination of any applicable waiting period, or any extension thereof, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and (ii) the receipt of all authorizations, consents or approvals required under the antitrust laws of certain non-U.S. jurisdictions specified in the Merger Agreement or the waiting periods with respect thereto having expired or been terminated (as described under “The Mergers—Regulatory Approvals Required for the Mergers” beginning on page 111 of this joint proxy statement/prospectus), in each case, without the imposition of a requirement that Teledyne or any of its subsidiaries (including FLIR or its subsidiaries) take any action or comply with any restriction that Teledyne would not be required to take or comply with under the applicable provisions of the Merger Agreement (see “The Merger Agreement—Efforts to Complete the Mergers” beginning on page 127 of this joint proxy statement/prospectus); and

 

   

receipt by FLIR of an opinion of Hogan Lovells US LLP, legal counsel to FLIR (“Hogan Lovells”), or other nationally recognized outside counsel, to the effect that the Mergers, taken together, will be treated for United States federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Code, which opinion shall be dated the closing date.

Teledyne and FLIR cannot be certain when, or if, the conditions to the Mergers will be satisfied (or, to the extent permitted by law, waived), or that the Mergers will be completed.

Regulatory Approvals Required for the Mergers (Beginning on page 111)

Completion of the Mergers is conditioned upon the receipt of certain governmental clearances or approvals, including, but not limited to, the expiration or termination of any applicable waiting period, or any extension thereof, under the HSR Act and certain other governmental consents and approvals.



 

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In the Merger Agreement, Teledyne and FLIR have agreed to use their respective reasonable best efforts, subject to certain limitations, to take, or cause to be taken, all actions necessary, proper or advisable under applicable law to consummate the transactions contemplated by the Merger Agreement, including making appropriate filings under any required regulatory law and any other necessary, proper or advisable registrations, filings and notices. The process for obtaining the requisite regulatory clearances and approvals for the Mergers is ongoing.

Under the HSR Act, certain transactions, including the Mergers, may not be completed unless certain waiting period requirements have expired or been terminated. The HSR Act provides that each party must file a pre-merger notification (the “HSR notifications”) with the Federal Trade Commission (the “FTC”) and the Antitrust Division of the Department of Justice (the “DOJ”). A transaction notifiable under the HSR Act may not be completed until the expiration of the waiting period following the parties’ filings of their respective HSR notifications or the termination of that waiting period. The parties’ HSR notifications were filed with the FTC and the DOJ on January 29, 2021, and termination of the waiting period under the HSR Act occurred on March 1, 2021.

Consummation of the Mergers is further subject to notification, clearance and/or approval under the antitrust, competition or trade regulatory laws of Turkey and China.

In furtherance of the foregoing, the Merger Agreement also requires Teledyne to avoid, eliminate or resolve any and all impediments under any regulatory law that may be asserted by any governmental authority with respect to the transactions contemplated by the Merger Agreement and to obtain all consents, approvals and waivers under any regulatory law that may be required by any governmental authority to enable the parties to close the transactions contemplated by the Merger Agreement as promptly as reasonably practicable, subject to certain limitations.

In addition, Teledyne’s obligations include an obligation to defend against any action or proceeding that is instituted or threatened by any governmental authority challenging the transactions contemplated by the Merger Agreement.

These requirements are described in more detail under “The Merger Agreement—Efforts to Complete the Mergers” beginning on page 127 of this joint proxy statement/prospectus. The regulatory approvals required for completion of the Mergers are further described under “The Mergers—Regulatory Approvals Required for the Mergers” beginning on page 111 of this joint proxy statement/prospectus.

FLIR Acquisition Proposals (Beginning on page 122)

The Merger Agreement provides that, subject to certain exceptions, FLIR, will not, and will use its reasonable best efforts to cause its representatives and its subsidiaries not to, directly or indirectly:

 

   

solicit, initiate or knowingly encourage or knowingly induce or facilitate the making, submission or announcement of any inquiries, proposals or offers constituting or that would reasonably be expected to lead to a FLIR acquisition proposal;

 

   

make available any information regarding FLIR or any of its subsidiaries to any person (other than Teledyne and Teledyne’s or FLIR’s representatives), in response to a FLIR acquisition proposal or any proposal, inquiry or offer that would reasonably be expected to lead to a FLIR acquisition proposal;

 

   

engage in discussions or negotiations with any person with respect to any FLIR acquisition proposal (other than to state that they currently are not permitted to have discussions);

 

   

approve, endorse or recommend any FLIR acquisition proposal;

 



 

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make or authorize any statement, recommendation or solicitation in support of any FLIR acquisition proposal or any proposal, inquiry or offer that would reasonably be expected to lead to a FLIR acquisition proposal; or

 

   

enter into any letter of intent or agreement in principle or any contract providing for, relating to or in connection with any FLIR acquisition proposal.

FLIR will also, and will instruct and will use its reasonable best efforts to cause its representatives to, (i) immediately cease and cause to be terminated all existing discussions or negotiations with any person conducted prior to the date of the Merger Agreement with respect to any FLIR acquisition proposal and (ii) request the prompt return or destruction, to the extent required by any confidentiality agreement of FLIR, of all confidential information previously made available by it or on its behalf in connection with any actual or potential FLIR acquisition proposal.

The term “FLIR acquisition proposal” is defined under “The Merger Agreement—FLIR Acquisition Proposals” beginning on page 122 of this joint proxy statement/prospectus.

FLIR Change in Recommendation; Termination for Superior Proposal (Beginning on page 125)

Under the Merger Agreement, subject to certain exceptions, neither the FLIR Board nor any committee thereof may (i) withdraw, qualify, or modify in a manner adverse to Teledyne its recommendation to FLIR’s stockholders to approve the FLIR Merger Proposal or (ii) adopt, recommend, endorse or otherwise declare advisable any FLIR acquisition proposal.

The Merger Agreement provides, however, that if FLIR receives an unsolicited bona fide written FLIR acquisition proposal prior to obtaining the FLIR stockholder approval that did not result from a breach of FLIR’s nonsolicitation obligations, the FLIR Board may subject to certain conditions change its recommendation and may terminate the Merger Agreement in accordance with its terms (including payment of the FLIR termination fee) to concurrently enter into a definitive agreement to effect a FLIR superior proposal if the FLIR Board determines in good faith (after consultation with FLIR’s outside legal counsel and financial advisor) that a FLIR acquisition proposal constitutes a FLIR superior proposal.

The Merger Agreement also provides that the FLIR Board may change its recommendation subject to certain conditions in response to a FLIR intervening event if the FLIR Board determines in good faith (after consultation with FLIR’s outside counsel) that failure to make a FLIR adverse recommendation change would be inconsistent with its fiduciary duties under applicable law. Following any such FLIR adverse recommendation change, the Merger Agreement provides that Teledyne may terminate the Merger Agreement and receive payment of a termination fee from FLIR.

The term “FLIR superior proposal” is defined under “The Merger Agreement—FLIR Acquisition Proposals” beginning on page 122 of this joint proxy statement/prospectus, and the term “FLIR intervening event” is defined under “The Merger Agreement—FLIR Change in Recommendation; Termination for Superior Proposal” beginning on page 125 of this joint proxy statement/prospectus.

Teledyne Change in Recommendation (Beginning on page 125)

Under the Merger Agreement, subject to certain exceptions, neither the Teledyne Board nor any committee thereof may withdraw, qualify, or modify in a manner adverse to FLIR its recommendation to Teledyne’s stockholders to approve the Teledyne Share Issuance Proposal.

 



 

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The Merger Agreement provides however, that, prior to obtaining the Teledyne stockholder approval, the Teledyne Board may subject to certain conditions change its recommendation in response to (i) a Teledyne intervening event or (ii) an unsolicited Teledyne acquisition proposal (where Teledyne did not, directly or indirectly, solicit, initiate, or encourage the making, submission or announcement of such Teledyne acquisition proposal), if the Teledyne Board determines in good faith (after consultation with Teledyne’s outside counsel) that failure to make a Teledyne adverse recommendation change would be inconsistent with its fiduciary duties under applicable law.

The terms “Teledyne intervening event” and “Teledyne acquisition proposal” are defined under “The Merger Agreement—Teledyne Change in Recommendation” beginning on page 125 of this joint proxy statement/prospectus.

Termination of the Merger Agreement; Termination Fees (Beginning on pages 137 and 139)

The Merger Agreement may be terminated at any time before the completion of the Mergers, whether before or after the approval of the FLIR Merger Proposal, in any of the following ways:

 

   

by mutual written agreement of Teledyne and FLIR;

 

   

by either Teledyne or FLIR, if:

 

     

the Effective Time has not occurred on or before June 30, 2021, which date may be extended to September 30, 2021 by either Teledyne or FLIR if the only closing condition not yet satisfied relates to the failure to obtain certain regulatory clearances and approvals specified in the Merger Agreement;

 

     

there is in effect a final and non-appealable judgment, order or injunction that restrains, enjoins, or otherwise prohibits or makes illegal the completion of the Mergers;

 

     

the approval by FLIR’s stockholders of the FLIR Merger Proposal is not obtained at the FLIR Special Meeting;

 

     

the approval by Teledyne’s stockholders of the Teledyne Share Issuance Proposal is not obtained at the Teledyne Special Meeting; or

 

     

there has been a breach by the other party of any representation or covenant that would result in the failure of the other party to satisfy an applicable condition to the completion of the Mergers (subject in certain cases to the opportunity for the breaching party to cure within 30 calendar days).

 

   

by Teledyne, if:

 

     

prior to the approval by FLIR’s stockholders of the FLIR Merger Proposal, (i) the FLIR Board has made a FLIR adverse recommendation change or (ii) failed to recommend to FLIR’s stockholders the approval of the FLIR Merger Proposal in this joint proxy statement/prospectus; or

 

     

there has been a willful and material breach by FLIR of its nonsolicitation obligations under the Merger Agreement (subject in certain cases to FLIR’s opportunity to cure within three business days).

 

   

by FLIR, if:

 

     

prior to the approval by FLIR’s stockholders of the FLIR Merger Proposal, in order to enter into an alternative acquisition agreement with respect to a FLIR superior proposal, subject to compliance with the terms of the Merger Agreement, including the payment by FLIR to Teledyne of a termination fee, as described below; or

 



 

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the Teledyne Board or any committee thereof has (i) made a Teledyne adverse recommendation change or (ii) failed to recommend to Teledyne’s stockholders the approval of the Teledyne Share Issuance Proposal in this joint proxy statement/prospectus.

The Merger Agreement further provides that, upon termination of the Merger Agreement under certain circumstances, each party may be obligated to pay the other party a termination fee of $250 million.

No Financing Condition; Financing (Beginning on pages 114 and 133)

Teledyne’s obligation to complete the transactions contemplated by the Merger Agreement is not subject to a financing condition. Teledyne intends to fund the cash portion of the consideration for the Mergers, as well as other fees and expenses required to be paid in connection with the Mergers, with a combination of cash on hand and borrowings.

Teledyne has obtained an aggregate of $4.0 billion in permanent financing through (i) a new Term Loan Credit Agreement with several banks and other institutions from time to time party thereto as lenders and Bank of America, N.A. as administrative agent, under which Teledyne will borrow $1.0 billion at the closing of the Mergers and (ii) the proceeds received from the issuance of approximately $3.0 billion of new notes on March 22, 2021. Teledyne also expects to assume FLIR’s $500.0 million remaining principal amount of existing 2.5% Senior Notes due 2030. The permanent financing replaced approximately $4.0 billion of the Bridge Facility pursuant to the Commitment Letter with BofA Securities, Inc. and Bank of America, N.A. Teledyne terminated the remaining $500.0 million of the Bridge Facility on March 25, 2021 after making a determination that its cash on hand and the $4.0 billion of permanent financing are sufficient to make the cash payments required to be paid in connection with the Mergers.

Litigation Related to the Mergers (Beginning on page 114)

Teledyne, FLIR and the members of the FLIR Board are parties to various claims and litigation related to the Merger Agreement and the Mergers. As of April 12, 2021, five complaints have been filed by purported stockholders of FLIR, each of whom seeks to enjoin the Mergers and other relief. The complaints assert claims against Teledyne, Merger Sub I, Merger Sub II, FLIR and FLIR’s directors under Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder for allegedly false and misleading statements in this joint proxy statement/prospectus.

Specific Performance; Remedies (Beginning on page 143)

Under the Merger Agreement, each of Teledyne and FLIR is entitled to an injunction to prevent breaches of the Merger Agreement or to enforce specifically the terms and provisions of the Merger Agreement, in addition to any other remedy to which that party may be entitled at law or in equity.

Voting Agreement (Beginning on page 147)

Concurrently with the execution of the Merger Agreement, on January 4, 2021, Earl Lewis, Chairman of the FLIR Board, entered into a voting agreement with Teledyne (the “Voting Agreement”), pursuant to which Mr. Lewis agreed to vote any shares of FLIR Common Stock that he beneficially owns for the adoption of the Merger Agreement and against any competing proposal or other action, proposal or agreement that would reasonably be expected to result in a breach of the Merger Agreement or prevent, materially delay or adversely affect the consummation of the Mergers. At the close of business on April 7, 2021, the FLIR Record Date, Mr. Lewis beneficially owned 1,024,976 shares of FLIR Common Stock or approximately 0.8% of the shares of FLIR Common Stock outstanding on that date. Mr. Lewis has also agreed to certain restrictions on the sale of FLIR Common Stock prior to the closing of the Mergers.



 

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Material U.S. Federal Income Tax Considerations (Beginning on page 148)

It is the intention of Teledyne and FLIR that the Mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. Assuming that the Mergers, taken together, qualify as a “reorganization,” a holder of FLIR Common Stock generally will not recognize any gain or loss upon receipt of Teledyne Common Stock in exchange for FLIR Common Stock in the Mergers, but will generally recognize gain (but not loss) with respect to the cash consideration in an amount equal to the lesser of (i) the amount of cash received by the U.S. holder (other than cash received in lieu of a fractional share of Teledyne Common Stock) and (ii) the amount by which the sum of the amount of such cash and the fair market value of the Teledyne Common Stock received by the U.S. holder exceeds the U.S. holder’s tax basis in its FLIR Common Stock (other than the portion of the basis attributable to the cash received in lieu of a fractional share of Teledyne Common Stock). Additionally, a U.S. holder of FLIR Common Stock that receives cash in lieu of a fractional share of Teledyne Common Stock will generally recognize capital gain or loss with respect to cash received in lieu of a fractional share of Teledyne Common Stock equal to the difference, if any, between the amount of cash received and the tax basis in the fractional share.

You should read “Material U.S. Federal Income Tax Considerations” beginning on page 148 of this joint proxy statement/prospectus for a more complete discussion of the U.S. federal income tax considerations relating to the Mergers. Tax matters can be complicated and the tax consequences of the Mergers to you will depend on your particular tax situation. You should consult your tax advisor to determine the tax consequences of the Mergers to you.

Accounting Treatment (Beginning on page 113)

Teledyne prepares its financial statements in accordance with accounting principles generally accepted in the U.S. The Mergers will be accounted for using the acquisition method of accounting. Teledyne will be treated as the acquirer for accounting purposes.

Comparison of Stockholder Rights (Beginning on page 173)

FLIR stockholders, whose rights are currently governed by FLIR’s certificate of incorporation, FLIR’s bylaws, and Delaware law, will upon completion of the Mergers become stockholders of Teledyne and as such, their rights will be governed by Teledyne’s restated certificate of incorporation (the “Teledyne Certificate of Incorporation”) and Teledyne’s second amended and restated bylaws (the “Teledyne Bylaws”), although they will continue to be governed by Delaware law. As a result, FLIR stockholders will have different rights once they become Teledyne stockholders due to differences between the governing documents of FLIR and Teledyne. These differences are described in detail in “Comparison of Stockholder Rights” beginning on page 173 of this joint proxy statement/prospectus.

Risk Factors (Beginning on page 32)

You should also carefully consider the risks that are described in “Risk Factors” beginning on page 32 of this joint proxy statement/prospectus.



 

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SUMMARY HISTORICAL FINANCIAL DATA OF TELEDYNE

The following table presents selected historical consolidated financial data of Teledyne. The statement of income data for the fiscal years ended January 3, 2021 (2020), December 29, 2019 (2019) and December 30, 2018 (2018), and the balance sheet data as of January 3, 2021 and December 29, 2019, have been derived from Teledyne’s audited consolidated financial statements and accompanying notes contained in Teledyne’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021, which is incorporated by reference herein. The statement of income data for the fiscal years ended December 31, 2017 (2017) and January 1, 2017 (2016), and the balance sheet data as of December 30, 2018, December 31, 2017 and January 1, 2017, have been derived from Teledyne’s audited consolidated financial statements for such years and accompanying notes, which are not incorporated by reference herein. Historical results are not necessarily indicative of the results that may be expected for any future period.

The information set forth below is only a summary. You should read the following information together with Teledyne’s consolidated financial statements and accompanying notes and the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Teledyne’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021, which is incorporated by reference herein and in Teledyne’s other reports filed with the SEC.

 

     Five-Year Summary of Selected Financial Data  
     2020      2019      2018      2017      2016  
     (in millions except for per share amounts)  

Consolidated Statements of Income Data:

              

Net sales

   $ 3,086.2      $ 3,163.6      $ 2,901.8      $ 2,603.8      $ 2,149.9  

Net income

   $ 401.9      $ 402.3      $ 333.8      $ 227.2      $ 190.9  

Basic earnings per common share

   $ 10.95      $ 11.08      $ 9.32      $ 6.45      $ 5.52  

Diluted earnings per common share

   $ 10.62      $ 10.73      $ 9.01      $ 6.26      $ 5.37  

Weighted average diluted common shares outstanding

     37.9        37.5        37.0        36.3        35.5  

Consolidated Balance Sheets Data:

              

Total assets

   $ 5,084.8      $ 4,579.8      $ 3,809.3      $ 3,846.4      $ 2,774.4  

Long-term debt, less current portion

   $ 680.9      $ 750.0      $ 610.1      $ 1,063.9      $ 509.7  

Total stockholders’ equity

   $ 3,228.6      $ 2,714.7      $ 2,229.7      $ 1,947.3      $ 1,554.4  

 

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SUMMARY HISTORICAL FINANCIAL DATA OF FLIR

The following table presents selected historical consolidated financial data of FLIR. The statement of income data for the fiscal years ended December 31, 2020, 2019 and 2018, and the balance sheet data as of December 31, 2020 and 2019, have been derived from FLIR’s audited consolidated financial statements and accompanying notes contained in FLIR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which is incorporated by reference herein. The statement of income data for the fiscal years ended December 31, 2017 and 2016, and the balance sheet data as of December 31, 2018, 2017 and 2016 have been derived from FLIR’s audited consolidated financial statements for such years and accompanying notes, which are not incorporated by reference herein. Historical results are not necessarily indicative of the results that may be expected for any future period.

The information set forth below is only a summary. You should read the following information together with FLIR’s consolidated financial statements and accompanying notes and the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in FLIR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, which is incorporated by reference herein and in FLIR’s other reports filed with the SEC.

 

     Year Ended December 31,  
     2020     2019     2018     2017     2016  
     (in thousands, except per share amounts)  

Consolidated Statements of Income Data:

          

Revenue

   $ 1,923,689     $ 1,887,026 (3)    $ 1,775,686     $ 1,800,434   $ 1,662,167

Cost of goods sold

     976,676       957,640 (4)      874,463       941,658     895,046
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     947,013       929,386       901,223       858,776     767,121

Operating expenses:

          

Research and development

     210,166       203,611       174,962       170,735     147,537

Selling, general and administrative

     389,130 (1)      442,416 (5)      389,093 (6)      373,867     322,435

Restructuring expenses

     30,475       10,099       4,854       625     1,431

Loss on sale of business

     —          —          13,708       23,588     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     629,771       656,126       582,617       568,815     471,403

Earnings from operations

     317,242       273,260       318,606       289,961     295,718

Interest expense

     27,240       27,711       16,147       16,804     18,071

Interest income

     (608     (2,651     (3,901     (1,764     (1,402

Loss on debt extinguishment

     9,126 (2)      —          —          —          —     

Other (income) expense, net

     (3,520     6,284       (743     (4,144     3,092
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings before income taxes

     285,004       241,916     307,103       279,065       275,957

Income tax provision

     72,420       70,319     24,678 (7)      171,842 (8)      109,331 (9) 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings

   $ 212,584     $ 171,597   $ 282,425     $ 107,223     $ 166,626
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net earnings per share:

          

Basic earnings per share

   $ 1.61     $ 1.27   $ 2.05     $ 0.78     $ 1.22
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 1.60     $ 1.26   $ 2.01     $ 0.77     $ 1.20
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

The 2020 selling, general and administrative expenses include $9.4 million separation, transaction and integration related expenses and $22.6 million Consent Agreement (defined below) related costs.

(2)

During 2020 FLIR recorded a $9.1 million loss on debt extinguishment due to the redemption of FLIR’s $425.0 million senior unsecured notes due June 15, 2021.

(3)

The 2019 revenue includes contributions from the acquisitions made during 2019.

 

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(4)

The 2019 cost of goods sold include $5.9 million inventory write downs associated with the Outdoor and Tactical Systems (“OTS”) restructuring.

(5)

The 2019 selling, general and administrative expenses include $17.0 million separation, transaction and integration related expenses, $22.3 million Consent Agreement related costs and $7.8 million goodwill and intangible asset impairment charges associated with the OTS restructuring.

(6)

The 2018 selling, general and administrative expenses include $15.0 million for the costs of a regulatory settlement, pursuant to the Consent Agreement.

(7)

The 2018 tax provision includes a discrete tax benefit of $33.1 million for the cancellation of Belgium tax assessments issued as part of the European Commission’s decision regarding state aid.

(8)

The 2017 tax provision includes an estimated tax expense of $94.4 million resulting from the effects of the Tax Cuts and Jobs Act and FLIR’s subsequent decision to end permanent reinvestment of all previously unremitted foreign earnings.

(9)

The 2016 tax provision includes a discrete tax charge for certain tax legislation in Belgium of $39.6 million.

 

     December 31,  
     2020      2019      2018      2017      2016  
     (in thousands, except per share amounts)  

Consolidated Balance Sheets Data:

              

Working capital

   $ 790,101    $ 695,679    $ 976,633    $ 992,286    $ 802,945

Total assets

     3,252,348      3,137,541      2,781,242      2,810,026      2,619,706

Short-term debt

     13,473      28,444      —          11      15,025

Long-term debt, excluding current portion

     724,919      648,419      421,948      420,684      501,921

Total shareholders’ equity

     1,883,374      1,871,433      1,876,786      1,834,558      1,678,326

Other Financial Data:

              

Cash dividends declared per common share

   $ 0.68    $ 0.68    $ 0.64    $ 0.60    $ 0.48

 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

The following table sets forth selected historical and unaudited pro forma combined per share information of Teledyne and FLIR. The unaudited pro forma combined per share information was computed by combining the historical financial information of Teledyne and FLIR for the fiscal year ended January 3, 2021, in the case of Teledyne, and December 31, 2020, in the case of FLIR, along with the effects of the acquisition method of accounting for business combinations as though the companies were combined at the beginning of the earliest period presented. Although helpful in illustrating the financial characteristics of the combined company, this information does not reflect any anticipated benefits of expected cost and funding synergies, opportunities to earn additional revenue, the impact of any future restructuring costs or other factors.

The historical per share information is derived from audited financial statements of each of Teledyne and FLIR as of and for the fiscal year ended January 3, 2021 and December 31, 2020, respectively.

The unaudited pro forma combined per share information has been presented for illustrative purposes only and is based on assumptions and estimates considered appropriate by Teledyne’s and FLIR’s management. The pro forma data presented does not represent what the actual results of operations and financial position would have been had the companies actually been combined as of the beginning of the earliest period presented. This information was prepared using estimated fair values and is subject to adjustment as additional information becomes available and as additional analysis is performed, and is not necessarily indicative of the future consolidated results of operations or financial position of the combined company. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma combined per share financial information.

FLIR declared and paid dividends during the periods presented. For more information on dividends of FLIR, see “Comparative Per Share Market Price and Dividend Information” beginning on page 30 of this joint proxy statement/prospectus. Teledyne did not pay dividends during the periods presented.

You should read this information in conjunction with the historical consolidated financial statements of Teledyne and FLIR and related notes contained in Teledyne’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021 and FLIR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, respectively, which are incorporated by reference into this joint proxy statement/prospectus. For information on where you can obtain copies of this information, see “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus.

 

     Teledyne     FLIR  
     Historical     Unaudited
Pro Forma
Combined
    Historical      Unaudited
Pro  Forma
Equivalent(1) 
 

Per common share data for the year ended January 3, 2021 for Teledyne and December 31, 2020 for FLIR

         

Earnings per share—basic

   $ 10.95     $ 8.16     $ 1.61      $ 0.59  

Earnings per share—diluted

   $ 10.62     $ 7.95     $ 1.60      $ 0.57  

Cash dividends declared per common share

     N/A (3)      N/A (3)    $ 0.68        N/A (3) 

Book value per common share(2)

   $ 87.37     $ 147.06     $ 14.36      $ 10.56  

 

(1)

The FLIR unaudited pro forma equivalent data was calculated by multiplying the unaudited pro forma combined data for Teledyne Common Stock by the exchange ratio of 0.0718.

(2)

Amounts calculated by dividing the total shareholders’ equity by the applicable common stock outstanding as of December 31, 2020 for FLIR and January 3, 2021 for Teledyne.

(3)

Teledyne does not issue cash dividends. Pro forma combined dividends per share is not presented, as the dividend per share for the combined company will be determined by the board of directors of the combined company following the completion of the Mergers.

 

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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

Market Prices

The following table sets forth the closing price per share of Teledyne Common Stock and FLIR Common Stock as reported on the NYSE and NASDAQ, respectively, on December 31, 2020, the last trading day prior to public announcement of the Mergers by Teledyne and FLIR on January 4, 2021, and on April 9, 2021, the most recent practicable trading day prior to the date of this joint proxy statement/prospectus for which this information was available. The table also shows the implied value of the merger consideration for each share of FLIR Common Stock as of the same dates. This implied value was calculated by multiplying the 5-day average volume-weighted average price of a share of Teledyne Common Stock on the relevant date by the number of shares of Teledyne Common Stock to be issued in exchange for each share of FLIR Common Stock (0.0718 shares of Teledyne Common Stock for each share of FLIR Common Stock) and then adding the amount of cash to be paid in exchange for each share of FLIR Common Stock ($28.00).

 

     FLIR
Common
Stock
     Teledyne
Common
Stock
     Implied Per
Share Value of
Merger
Consideration
 

December 31, 2020

   $ 43.83      $ 391.98      $ 56.00  

April 9, 2021

   $ 57.73      $ 419.72      $ 58.14  

The market prices of shares of Teledyne Common Stock and FLIR Common Stock have fluctuated since the date of the announcement of the Merger Agreement and will continue to fluctuate from the date of this joint proxy statement/prospectus to the date the Mergers are completed. No assurance can be given concerning the market prices of shares of Teledyne Common Stock and shares of FLIR Common Stock before completion of the Mergers or concerning the market price of shares of Teledyne Common Stock after completion of the Mergers. The aggregate proportion of the merger consideration payable in Teledyne Common Stock is fixed and will not be adjusted for changes in the stock prices of either company’s shares before the Mergers are completed. As a result, any changes in the market price of Teledyne Common Stock will have a corresponding effect on the market value of the merger consideration.

Dividends

Teledyne does not currently pay dividends. Instead, Teledyne intends to use future earnings to fund the development and growth of its business, including through potential acquisitions. It also may deploy cash to fund share repurchases. Therefore, it does not anticipate paying any cash dividends in the foreseeable future. Subject to the limitations set forth in the Merger Agreement, any future dividends by Teledyne will be made at the discretion of the Teledyne Board.

Holders of FLIR Common Stock are entitled to receive dividends when they are declared by the FLIR Board. Payment of dividends has depended on many factors, including FLIR’s financial condition, earnings and other factors the FLIR Board deems relevant. FLIR last paid a quarterly dividend on March 19, 2021 of $0.17 per share of FLIR Common Stock. The Merger Agreement permits FLIR, in the discretion of the FLIR Board, to declare and pay up to two quarterly cash dividends on FLIR Common Stock consistent with past practice, but in each case in an amount not to exceed $0.17 per share of FLIR Common Stock.

After completion of the Mergers, any former FLIR stockholder who holds Teledyne Common Stock into which shares of FLIR Common Stock have been converted in connection with the Mergers will receive dividends as declared and paid on Teledyne Common Stock, should there be any. However, no dividend or other distribution having a record date after completion of the Mergers will actually be paid with respect to any shares of Teledyne Common Stock into which shares of FLIR Common Stock have been converted in connection with the Mergers until the certificates formerly representing shares of FLIR Common Stock have been surrendered (or

 

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the book-entry shares formerly representing shares of FLIR Common Stock have been transferred), at which time any accrued dividends and other distributions on those shares of Teledyne Common Stock with a payment date prior to such date will be paid without interest.

There can be no assurance that any future dividends will be declared or paid by Teledyne or FLIR or as to the amount or timing of those dividends, if any.

 

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RISK FACTORS

In addition to the other information contained in or incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 44 of this joint proxy statement/prospectus, the following risk factors should be considered carefully before deciding how to vote. You should also read and consider the risk factors associated with each of the businesses of Teledyne and FLIR because these risk factors may affect the operations and financial results of the combined company. These risk factors may be found under Part I, Item 1A, “Risk Factors” in each of Teledyne’s and FLIR’s Annual Reports on Form 10-K for the fiscal year ended January 3, 2021 and the fiscal year ended December 31, 2020, respectively, filed with the SEC on February 26, 2021 and February 25, 2021, respectively, and in Teledyne’s and FLIR’s subsequent filings with the SEC, in each case, which are incorporated by reference into this joint proxy statement/prospectus. For information on where you can obtain copies of this information, see “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus.

Risks Related to the Mergers

The merger consideration is fixed and will not be adjusted. Because the market price of Teledyne Common Stock may fluctuate, FLIR stockholders cannot be sure of the market value of the stock consideration they will receive in exchange for their shares of FLIR Common Stock in connection with the Mergers.

Pursuant to the Merger Agreement, at the Effective Time, each share of FLIR Common Stock issued and outstanding immediately prior to the Effective Time (other than shares owned or held by (x) Teledyne or any of its subsidiaries, (y) in treasury or otherwise by FLIR or any of its subsidiaries and (z) any person who is entitled to demand and properly demands appraisal of such shares under Delaware law) will automatically convert into the right to receive (i) $28.00 in cash and (ii) 0.0718 shares of Teledyne Common Stock. The aggregate proportion of the merger consideration payable in Teledyne Common Stock is fixed and will not be adjusted for changes in the stock prices of either Teledyne Common Stock or FLIR Common Stock before the Mergers are completed. Accordingly, the market value of the stock consideration that FLIR stockholders will receive will vary based on fluctuations in the price of Teledyne Common Stock until the time the Mergers are completed.

The market prices of shares of Teledyne Common Stock and FLIR Common Stock have fluctuated since the date of the announcement of the Merger Agreement and will continue to fluctuate from the date of this joint proxy statement/prospectus to the date the Mergers are completed. Share price changes may result from numerous factors, including changes in the respective business operations and prospects of Teledyne and FLIR, changes in general market and economic conditions and regulatory considerations. Many of these factors are beyond the control of Teledyne or FLIR. No assurance can be given concerning the market prices of shares of Teledyne Common Stock and shares of FLIR Common Stock before completion of the Mergers. For additional information regarding the value of the implied merger consideration and the impact of the changes in the market prices of Teledyne Common Stock and FLIR Common Stock see, “Comparative Per Share Market Price and Dividend Information—Market Prices” beginning on page 30 of this joint proxy statement/prospectus.

Neither party has a right to terminate the Merger Agreement based solely upon changes in the market price of Teledyne Common Stock.

Completion of the Mergers is subject to a number of conditions, some of which are outside of the parties’ control, and if any of these conditions are not satisfied or waived, the Mergers will not be completed.

The Merger Agreement contains a number of conditions that must be satisfied (or waived) before the parties are required to consummate the Mergers. Those conditions include, among other conditions:

 

   

the approval by FLIR’s stockholders of the FLIR Merger Proposal;

 

   

the approval by Teledyne’s stockholders of the Teledyne Share Issuance Proposal;

 

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the approval for listing on the NYSE, subject to official notice of issuance, of the shares of Teledyne Common Stock to be issued to FLIR stockholders in the First Merger;

 

   

the receipt of certain regulatory approvals, including the expiration or termination of any applicable waiting period (and any extension thereof) under the HSR Act and under the antitrust laws of certain non-U.S. jurisdictions;

 

   

the absence of any temporary restraining orders, injunctions or other legal restraints that have the effect of preventing or making illegal the consummation of the Mergers;

 

   

the effectiveness under the Securities Act of the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part;

 

   

subject to certain materiality exceptions, the accuracy of the representations and warranties of the parties;

 

   

compliance by the parties in all material respects with their respective covenants under the Merger Agreement;

 

   

the absence of a material adverse effect on either party since the date of the Merger Agreement; and

 

   

the receipt by FLIR of a tax opinion substantially to the effect that for United States federal income tax purposes the Mergers, taken together, will qualify as a “tax free reorganization” under Section 368(a) of the Code.

The required satisfaction or waiver of the foregoing conditions could delay the completion of the Mergers for a significant period of time or prevent it from occurring at all. Any delay in completing the Mergers could cause the parties not to realize some or all of the benefits that the parties expect to achieve following the completion of the Mergers. There can be no assurance that the conditions to the closing of the Mergers will be satisfied or waived or that the Mergers will be completed. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the Mergers, see “The Merger Agreement—Conditions to Completion of the Mergers” on page 120 of this joint proxy statement/prospectus.

In order to complete the Mergers, Teledyne and FLIR must make certain governmental filings and obtain certain governmental authorizations, and if such filings and authorizations are not made or granted or are granted with conditions to the parties, the closing of the Mergers may be jeopardized or the anticipated benefits of the Mergers may be reduced.

The closing of the Mergers is conditioned upon the expiration or termination of any applicable waiting period (and any extension thereof) under the HSR Act and the receipt of other clearances, authorizations, consents or approvals required under certain other domestic and foreign laws. The parties’ HSR notifications were filed with the FTC and the DOJ on January 29, 2021, and termination of the waiting period under the HSR Act occurred on March 1, 2021. Although Teledyne and FLIR have agreed in the Merger Agreement to use their reasonable best efforts, subject to certain limitations, to make certain other governmental filings or obtain the required governmental clearances and authorizations, as the case may be, there can be no assurance that the relevant waiting periods will expire or that the relevant clearances and authorizations will be obtained. In addition, the governmental authorities with or from which these authorizations are required have broad discretion in administering the governing regulations. Whether and when required governmental authorizations are granted could be affected by (i) adverse developments in Teledyne’s or FLIR’s regulatory standing or any other factors considered by regulators in granting such approvals; (ii) governmental, political or community group inquiries, investigations or opposition; or (iii) changes in legislation or the political environment generally. As a condition to authorization of the Mergers, governmental authorities may impose requirements, limitations or costs or place restrictions on the conduct of Teledyne’s business after completion of the Mergers. Such conditions, terms, obligations or restrictions may have the effect of delaying or preventing the closing of the Mergers or imposing additional material costs on or materially limiting the revenues of the combined company following the Mergers, or otherwise adversely affecting Teledyne’s businesses and results of operations after completion of the Mergers. In addition, these terms, obligations or restrictions may result in the delay or abandonment of the Mergers.

 

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Teledyne’s and FLIR’s existing business relationships with third parties may be disrupted due to uncertainty associated with the Mergers, which could have an adverse effect on the results of operations, cash flows and financial position of Teledyne and FLIR.

Parties with which either Teledyne or FLIR do business may experience uncertainty associated with the Mergers, including relating to current or future business relationships with Teledyne, FLIR or the combined business. Teledyne’s and FLIR’s existing business relationships may be disrupted as parties with which Teledyne or FLIR do business may attempt to negotiate changes in existing business relationships or instead consider entering into business relationships with parties other than Teledyne, FLIR or the combined business. These disruptions could have an adverse effect on the businesses, financial condition, results of operations or prospects of the combined business, including an adverse effect on Teledyne’s ability to realize the anticipated benefits of the Mergers. The risk, and adverse effect, of such disruptions could be exacerbated by a delay in completion of the Mergers or termination of the Merger Agreement.

Certain executive officers and directors of FLIR and Teledyne may have interests in the Mergers that might differ from your interests as a stockholder of FLIR or as a stockholder of Teledyne, as applicable.

In considering the recommendation of the FLIR Board to vote for the FLIR Merger Proposal, FLIR stockholders should be aware that the non-employee directors and executive officers of FLIR have certain interests in the Mergers that may be different from or in addition to the interests of FLIR stockholders generally. These interests include, among others, the accelerated vesting of outstanding equity awards pursuant to the Merger Agreement, potential severance benefits and other payments and rights to ongoing indemnification and insurance coverage. The FLIR Board was aware of and considered those interests, among other matters, when evaluating and negotiating the Merger Agreement and approving the Merger Agreement, and in making its recommendation that the stockholders approve the FLIR Merger Proposal. Additionally, one director on the FLIR Board, Michael T. Smith, also serves on the Teledyne Board and it is expected that Mr. Smith will continue to serve on the Teledyne Board after the consummation of the Mergers.

For more information, see “Interests of FLIR’s Directors and Executive Officers in the Mergers” beginning on page 152 and “Interests of Teledyne’s Directors and Executive Officers in the Mergers” beginning on page 151 of this joint proxy statement/prospectus.

Failure to complete the Mergers could negatively impact the stock price and the future business and financial results of each of Teledyne and FLIR.

If the Mergers are not completed for any reason, the ongoing businesses of Teledyne and FLIR may be adversely affected, and without realizing any benefits of having completed the Mergers, Teledyne and FLIR would be subject to a number of risks, including the following:

 

   

Teledyne and FLIR may experience negative reactions from the financial markets, including negative impacts on their respective stock prices;

 

   

Teledyne and FLIR may experience negative reactions from their employees;

 

   

Teledyne and FLIR may experience adverse impacts on their relationships with customers, vendors and industry contracts which could adversely affect their respective results of operations and financial condition;

 

   

Teledyne and FLIR will be required to pay certain costs relating to the Mergers, whether or not the Mergers are completed;

 

   

Teledyne and FLIR may have expended substantial commitments of time and resources on matters relating to the Mergers (including integration planning), which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to either Teledyne or FLIR as an independent company; and

 

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in certain circumstances, Teledyne or FLIR may be required to pay a termination fee of $250 million to the other party.

In addition to the above risks, if the Merger Agreement is terminated and either party’s board of directors instead seeks an alternative transaction, such party’s stockholders cannot be certain that such party will be able to find another party willing to engage in a transaction on more attractive terms than those contemplated by the Merger Agreement.

If the Mergers are not completed, these risks may materialize and may adversely affect Teledyne’s and/or FLIR’s businesses, financial condition, results of operations and stock prices.

The Merger Agreement subjects Teledyne and FLIR to restrictions on their respective business activities during the period while the Mergers are pending.

The Merger Agreement contains restrictions on the ability of Teledyne and FLIR to take certain actions and generally obligates each of Teledyne and FLIR to conduct its business and the business of its subsidiaries in all material respects in the ordinary course during the period of time while the Mergers are pending absent the prior written consent of the other party. These restrictions could prevent Teledyne and FLIR from pursuing certain business opportunities that arise prior to the consummation of the Mergers or termination of the Merger Agreement and are outside the ordinary course of business. If Teledyne or FLIR is unable to take actions it believes are beneficial, such restrictions could have an adverse effect on Teledyne’s or FLIR’s, as applicable, business, financial condition and results of operations. See “The Merger Agreement—Conduct of Business Pending the Mergers” beginning on page 129 of this joint proxy statement/prospectus.

The Merger Agreement contains provisions that could discourage a potential competing acquirer of FLIR from making a favorable proposal and, in specified circumstances, could require FLIR to make a termination payment to Teledyne.

Pursuant to the Merger Agreement, FLIR has agreed, among other things, not to (i) solicit proposals relating to certain alternative acquisition transactions, (ii) engage in discussions or negotiations with respect to certain alternative transaction proposals or provide information in response to proposals relating to certain alternative acquisition transactions, (iii) make any statements or recommendations in support of certain alternative acquisition transaction proposals or (iv) approve or enter into any agreements providing for any such alternative acquisition transactions, in each case subject to certain exceptions to permit members of the FLIR Board to comply with their duties as directors under applicable law. Notwithstanding these “no-shop” restrictions, prior to obtaining FLIR stockholder approval of the FLIR Merger Proposal, under certain specified circumstances the FLIR Board may change its recommendation to stockholders and FLIR may also terminate the Merger Agreement to accept a superior acquisition proposal upon payment of a $250 million termination fee to Teledyne. See “The Merger Agreement—FLIR Change in Recommendation; Termination for Superior Proposal beginning on page 125 and “The Merger Agreement—Termination of the Merger Agreement” beginning on page 137 of this joint proxy statement/prospectus.

These provisions could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of FLIR from considering or proposing such an acquisition or might result in a potential competing acquirer proposing to pay a lower value than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances under the Merger Agreement.

The shares of Teledyne Common Stock to be received by FLIR stockholders upon completion of the Mergers will have different rights from shares of FLIR Common Stock.

FLIR stockholders, whose rights are currently governed by FLIR’s certificate of incorporation, FLIR’s bylaws, and Delaware law, will upon completion of the Mergers become stockholders of Teledyne and as such,

 

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their rights will be governed by the Teledyne Certificate of Incorporation and the Teledyne Bylaws, although they will continue to be governed by Delaware law. As a result, FLIR stockholders will have different rights than they currently have as FLIR stockholders, which may be less favorable than their current rights. These differences are described in detail in “Comparison of Stockholder Rights” beginning on page 173 of this joint proxy statement/prospectus.

After the Mergers, FLIR stockholders and Teledyne stockholders will have lower ownership and voting interests in Teledyne than they currently have in FLIR and Teledyne, respectively, and will exercise less influence over management.

Based on the number of shares of FLIR Common Stock and the FLIR equity awards outstanding as of March 2, 2021, Teledyne estimates that it will issue approximately 9.7 million shares of Teledyne Common Stock pursuant to the Merger Agreement. The actual number of shares of Teledyne Common Stock to be issued and reserved for issuance in connection with the Mergers will be determined at completion of the Mergers based on the terms of the Merger Agreement and the number of shares of FLIR Common Stock outstanding at that time. Based on the number of shares of Teledyne Common Stock and FLIR Common Stock outstanding as of February 23, 2021 current Teledyne stockholders are expected to own approximately 79.2% of Teledyne Common Stock outstanding immediately following the Mergers, and current FLIR stockholders are expected to own approximately 20.8% of Teledyne Common Stock outstanding immediately following the Mergers, each on a fully diluted basis (without giving effect to any shares of Teledyne Common Stock that may be held by FLIR stockholders prior to the Mergers). Consequently, current FLIR stockholders and current Teledyne stockholders will have less influence over the management and policies of Teledyne after the Mergers than they currently have over the management and policies of FLIR and Teledyne, respectively.

Litigation challenging the Mergers may increase costs and prevent the Mergers from being completed within the expected timeframe, or from being completed at all.

Teledyne, FLIR and members of the FLIR Board are parties to various claims and litigation related to the Merger Agreement and the Mergers. Among other remedies, the plaintiffs in such matters are seeking to enjoin the Mergers. One of the conditions to completion of the Mergers is the absence of any judgment, order or injunction that has the effect of prohibiting completion of the Mergers. Accordingly, if a plaintiff is successful in obtaining an order enjoining completion of the Mergers, then such order may prevent the Mergers from being completed, or from being completed within the expected time frame. Moreover, litigation could be time consuming and expensive, could divert the attention of Teledyne’s and FLIR’s management away from their regular businesses, and, if adversely resolved against either Teledyne or FLIR or their respective directors, could have a material adverse effect on Teledyne’s and FLIR’s respective financial condition.

Teledyne and FLIR will incur significant transaction costs in connection with the Mergers.

Teledyne and FLIR expect to incur a number of non-recurring costs associated with the Mergers and combining the operations of the two companies. The significant, non-recurring costs associated with the Mergers include, among others, fees and expenses of financial, legal and other advisors and representatives, filing fees due in connection with filings required by governmental agencies and filing fees and printing and mailing costs for this joint proxy statement/prospectus. Some of these costs have already been incurred or may be incurred regardless of whether the Mergers are completed, including a portion of the fees and expenses of financial advisors, legal advisors and other advisors and representatives and filing fees for this joint proxy statement/prospectus. Teledyne also will incur significant transaction fees and costs related to its debt financing and in connection with its formulating and implementing integration plans with respect to the two companies. Teledyne continues to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the Mergers and the integration of the two companies’ businesses. Although Teledyne expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses,

 

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should allow Teledyne to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.

Unplanned future events and conditions could reduce or delay the accretion to earnings that is currently projected by Teledyne in connection with the Mergers.

While no assurances can be given as to future financial performance, Teledyne currently believes that the acquisition of FLIR will be immediately accretive to earnings, excluding transaction costs and intangible asset amortization. This expectation is based on preliminary estimates, which may materially change. Furthermore, unplanned future events and conditions could reduce or delay the accretion that is currently projected or result in the Mergers being dilutive to Teledyne’s earnings per share, including adverse changes in market conditions, additional transaction and integration related costs and other factors such as the failure to realize some or all of the benefits anticipated in the Mergers. Any dilution of, reduction in or delay of any accretion to, Teledyne’s earnings per share could cause the price of shares of Teledyne Common Stock to decline or grow at a reduced rate.

Each of Teledyne and FLIR are required, under certain circumstances, to pay a termination fee, which, if paid, may materially and adversely affect such party’s financial results.

Teledyne may be required, under certain circumstances in connection with a termination of the Merger Agreement, to pay FLIR a termination fee of $250 million, which could materially and adversely affect Teledyne’s financial condition and results of operations. Additionally, FLIR may be required, under certain circumstances in connection with a termination of the Merger Agreement, to pay Teledyne a termination fee of $250 million, which may materially and adversely affect FLIR’s financial results.

The COVID-19 pandemic may delay or prevent the completion of the Mergers.

On January 30, 2020, the World Health Organization declared the COVID-19 outbreak as a global health emergency. On March 11, 2020, the World Health Organization raised the COVID-19 outbreak to “pandemic” status. Given the ongoing and dynamic nature of the COVID-19 pandemic, it is difficult to predict the impact of that crisis on the businesses of Teledyne and FLIR, and there is no guarantee that efforts by Teledyne or FLIR to address the adverse impact of the COVID-19 pandemic will be effective. If either Teledyne or FLIR is unable to recover from a business disruption on a timely basis, Teledyne’s business and financial condition and results of operations following the completion of the Mergers could be adversely affected. The Mergers may also be delayed or adversely affected by the COVID-19 pandemic, or become more costly due to Teledyne policies, FLIR policies or government policies and actions to protect the health and safety of individuals, or government policies or actions to maintain the functioning of national or global economies and markets could delay or prevent the completion of the Mergers. Teledyne or FLIR may also incur additional costs to remedy damages caused by such disruptions, which could adversely affect its financial condition or results of operations.

If the Mergers do not qualify as a tax-free reorganization, there may be adverse tax consequences.

The Mergers are intended to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code. The closing of the Mergers is conditioned on the receipt by FLIR of an opinion of counsel to the effect that the Mergers will qualify as a tax-free reorganization within the meaning of Section 368(a) of the Code. However, this legal opinion will not be binding on the Internal Revenue Service (the “IRS”) or on the courts. If, for any reason, the Mergers were to fail to qualify as a tax-free reorganization, then a U.S. holder of FLIR Common Stock generally would recognize gain or loss, as applicable, equal to the difference between the sum of the amount of cash and the fair market value of Teledyne Common Stock received by the U.S. holder in the exchange and the U.S. holder’s tax basis in its shares of FLIR Common Stock surrendered.

 

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Risks Related to the Combined Company Following the Mergers

Different factors may affect the market price of Teledyne Common Stock after the Mergers than those that currently affect the market price of FLIR Common Stock.

Upon completion of the Mergers, holders of shares of FLIR Common Stock will become holders of shares of Teledyne Common Stock. Teledyne’s business differs from that of FLIR’s in important respects, and, accordingly, the results of operations of Teledyne after the Mergers, as well as the market price of Teledyne Common Stock, may be affected by factors different from those currently affecting the results of operations of FLIR and the market price of FLIR Common Stock. For a discussion of the respective businesses of Teledyne and FLIR and certain factors to consider in connection with those businesses, see “The Companies” beginning on page 46 of this joint proxy statement/prospectus and the documents incorporated by reference into this joint proxy statement/prospectus and referred to in “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus.

After completion of the Mergers, Teledyne may fail to realize the anticipated benefits and cost savings of the Mergers, which could adversely affect the value of Teledyne Common Stock.

The success of the Mergers will depend, in significant part, on Teledyne’s ability to realize the anticipated benefits and cost savings from combining the businesses of Teledyne and FLIR. This success will depend largely on Teledyne’s ability to successfully integrate the business of FLIR. If Teledyne is not able to successfully integrate FLIR’s business within the anticipated time frame, or at all, the anticipated cost savings and other benefits of the Mergers may not be realized fully, or at all, or may take longer to realize than expected, the combined business may not perform as expected and the value of the Teledyne Common Stock may be adversely affected.

Teledyne and FLIR have operated and, until completion of the Mergers, will continue to operate independently, and there can be no assurances that their businesses can be integrated successfully. Teledyne and FLIR will be required to devote significant management attention and resources to integrating their business practices and operations. It is possible that the integration process could result in the loss of key Teledyne or FLIR employees, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses, unexpected integration issues or liabilities, higher than expected integration costs, and an overall post-completion integration process that takes longer than originally anticipated. The difficulties of combining the operations of the companies include, among others:

 

   

experiencing unforeseen expenses or delays associated with the integration;

 

   

combining certain of the companies’ operations, financial, reporting and corporate functions;

 

   

integrating the companies’ technologies;

 

   

integrating FLIR’s suite of imaging sensor products with Teledyne’s product offerings;

 

   

identifying and eliminating redundant and underperforming functions and assets;

 

   

harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;

 

   

maintaining existing agreements with customers and suppliers;

 

   

addressing possible differences in corporate cultures and management philosophies;

 

   

consolidating the companies’ administrative and information technology infrastructure;

 

   

coordinating sales, distribution and marketing efforts;

 

   

moving certain businesses and positions to different locations;

 

   

coordinating geographically separate organizations; and

 

   

effecting potential actions that may be required in connection with obtaining regulatory approvals.

 

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In addition, at times, the attention of certain members of either company’s or both companies’ management and resources may be focused on the integration of the businesses of the two companies and diverted from day-to-day business operations, which may disrupt each company’s ongoing business and the business of the combined company. If Teledyne does not successfully manage these issues and the other challenges inherent in integrating businesses of the size and complexity of Teledyne and FLIR, then Teledyne may not achieve the anticipated benefits of the Mergers on a timely basis or at all and Teledyne’s revenue, expenses, operating results and financial condition could be materially and adversely affected.

The unaudited pro forma condensed combined financial statements included in this joint proxy statement/prospectus are based on a number of preliminary estimates and assumptions and the actual results of operations and financial position of the combined company after the Mergers may differ materially.

The unaudited pro forma condensed combined financial statements in this joint proxy statement/prospectus are based on the historical financial statements of Teledyne and FLIR after giving effect to the Mergers and the assumptions and adjustments as discussed in the section titled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 160 of this joint proxy statement/prospectus.

Such pro forma condensed combined financial statements are subject to numerous risks and uncertainties, rely on a number of assumptions and are not a guarantee of future performance. The assumptions used in preparing the pro forma condensed combined financial statements may not prove to be accurate, and other factors may affect the combined company’s financial condition or results of operations following the proposed transactions contemplated by the Merger Agreement. The results indicated in the unaudited pro forma condensed combined financial information may not be realized and future financial results may materially vary from the unaudited pro forma condensed combined financial statements. See the section titled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 160 of this joint proxy statement/prospectus.

The future results of the combined company may be adversely impacted if Teledyne does not effectively manage its expanded operations following completion of the Mergers.

Following completion of the Mergers, the size of the combined company’s business will be significantly larger than the current size of either Teledyne’s or FLIR’s respective businesses. Teledyne’s ability to successfully manage this expanded business will depend, in part, upon management’s ability to implement an effective integration of the two companies and its ability to manage a combined business with significantly larger size and scope with the associated increased costs and complexity. Teledyne’s management may not be successful and Teledyne may not realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the Mergers.

Teledyne and FLIR may have difficulty retaining, motivating, and attracting executives and other employees in light of the Mergers, including those experienced with post-acquisition integration, and failure to do so could seriously harm the combined company.

The success of the combined company following the Mergers largely depends on the skills, experience and continued efforts of executive officers and employees of each of Teledyne and FLIR. As a result, to be successful, Teledyne must retain and motivate executives and other employees and keep them focused on the strategies and goals of the combined company. However, uncertainty about the effect of the Mergers on Teledyne and FLIR employees may impair Teledyne’s and FLIR’s ability to retain, motivate and attract personnel prior to and following the Mergers. Employee retention may be particularly challenging during the period while the Mergers are pending, as employees of Teledyne and FLIR may experience uncertainty about their future roles with the combined business. If employees of Teledyne or FLIR depart, the integration of the companies may be more difficult and the combined business following the Mergers may be harmed. Furthermore, Teledyne may incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent relating to the businesses of Teledyne or FLIR, and Teledyne’s ability to realize

 

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the anticipated benefits of the Mergers may be adversely affected. In addition, there could otherwise be disruptions to or distractions for the workforce and management associated with integrating employees into Teledyne.

The effects of the COVID-19 pandemic could adversely affect the business, results of operations and financial condition of Teledyne, FLIR and the combined company following the completion of the Mergers.

The transmission of COVID-19 and efforts to contain its spread have resulted in significant travel restrictions and disruptions, significant disruptions to business operations, supply chains and customer activity, event cancellations and restrictions, service cancellations, quarantines and related government actions and policies, as well as general concern and uncertainty that has negatively affected the U.S. and global economy and financial environments. The ultimate impact of the COVID-19 pandemic on the business, results of operations and financial condition of Teledyne, FLIR or the combined company is uncertain and difficult to predict, but the COVID-19 pandemic could cause sudden, significant disruptions in their respective business operations, including the following:

 

   

Teledyne and FLIR have experienced, and the combined company may experience, disruptions in the supply chain from the actions of governments or businesses intended to contain or slow the spread of the virus, such as closing factories or other operations that produce components necessary for the products of Teledyne, FLIR and the combined company, quarantining individuals around major commercial hubs, and/or restricting the transportation of goods and services;

 

   

Each of Teledyne, FLIR and the combined company may experience significant workplace disruptions as a result of employees in their respective production facilities becoming sick or being quarantined as a result of exposure to COVID-19;

 

   

Delays in inspection, acceptance and payment by the customers of Teledyne, FLIR or the combined company, or delays in governmental or international orders, could affect sales and cash flows of Teledyne, FLIR or the combined company;

 

   

Pursuant to government closure orders intended to contain or slow the spread of the virus, FLIR has been required to close certain of its facilities that perform work that is deemed non-essential. One or more additional facilities could become subject to similar orders, which could further disrupt the operations of FLIR or the combined company if the work performed at such facilities cannot be conducted remotely; or

 

   

Deterioration of worldwide credit and financial markets could adversely affect the ability of Teledyne, FLIR or the combined company to obtain financing on favorable terms and continue to meet their respective liquidity needs.

In addition, across the globe, the response to the pandemic generally has involved a dramatic, rapid reduction in social and economic activity, which has led to a global recession which could be protracted. Accordingly, the global economic downturn caused by the pandemic could significantly reduce demand for certain products and services of Teledyne, FLIR or the combined company, particularly those with industrial or consumer applications. Teledyne and FLIR continue to monitor the rapidly evolving situation related to COVID-19. The effects described above, alone or taken together, could have a material adverse effect on the business, results of operations, legal exposure, or financial condition of Teledyne, FLIR or the combined company.

The market price of Teledyne Common Stock may decline as a result of the Mergers.

The market price of Teledyne Common Stock may decline as a result of the Mergers if the combined company does not achieve the perceived benefits of the Mergers as rapidly or to the extent anticipated by financial or industry analysts, or if the effect of the Mergers on the combined company’s financial results is not consistent with the expectations of financial or industry analysts.

 

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In addition, upon consummation of the Mergers, FLIR stockholders and Teledyne stockholders will own interests in a company operating an expanded business with a different mix of properties, risks and liabilities. Current FLIR stockholders and Teledyne stockholders may not wish to continue to invest in Teledyne, or for other reasons may wish to dispose of some or all of their shares of Teledyne Common Stock. If, following the Effective Time, significant amounts of Teledyne Common Stock are sold, the price of Teledyne Common Stock could decline.

Teledyne does not currently pay dividends and, following the Mergers, the combined company is not expected to pay dividends.

Teledyne does not currently pay dividends and currently does not intend to pay dividends following the Mergers. Teledyne anticipates retaining any future earnings to fund the development and growth of its business, including through potential acquisitions. Teledyne also intends to use cash to service and repay indebtedness, including indebtedness Teledyne will incur to finance the Mergers, and to fund share repurchases. Any future decision to pay any dividends will be made at the discretion of the Teledyne Board. Stockholders of the combined company will have no contractual or other legal right to dividends that have not been declared by the Teledyne Board.

The incurrence by Teledyne of substantial indebtedness in connection with the financing of the Mergers along with the planned assumption of FLIR’s existing senior notes may have an adverse impact on Teledyne’s liquidity, limit Teledyne’s flexibility in responding to other business opportunities and increase Teledyne’s vulnerability to adverse economic and industry conditions.

Teledyne expects to incur a significant amount of indebtedness in connection with the financing of the Mergers, which Teledyne expects will be funded using borrowings along with cash on hand. Teledyne may also incur additional indebtedness through the planned assumption of FLIR’s existing senior notes. The use of indebtedness to finance the Mergers will reduce Teledyne’s liquidity and could cause Teledyne to place more reliance on cash generated from operations to pay principal and interest on Teledyne’s debt, thereby reducing the availability of Teledyne’s cash flow for working capital, dividend and capital expenditure needs or to pursue other potential strategic plans. Teledyne expects that the agreements it will enter into with respect to the indebtedness it will incur to finance the Mergers or in connection with the planned assumption of FLIR’s existing senior notes will contain negative covenants, that, subject to certain exceptions, will include limitations on indebtedness, liens, dispositions, investments and mergers and other fundamental changes. Teledyne’s ability to comply with these negative covenants can be affected by events beyond its control. The indebtedness and these negative covenants will also have the effect, among other things, of limiting Teledyne’s ability to obtain additional financing, if needed, limiting its flexibility in the conduct of its business and making Teledyne more vulnerable to economic downturns and adverse competitive and industry conditions. In addition, a breach of the negative covenants could result in an event of default with respect to the indebtedness, which, if not cured or waived, could result in the indebtedness becoming immediately due and payable and could have a material adverse effect on Teledyne’s business, financial condition or operating results.

Following completion of the Mergers, the credit rating of the combined company could be downgraded and/or the combined company may fail to obtain an investment grade rating, which may increase borrowing costs or trigger an obligation to make an offer to purchase FLIR’s $500 million senior notes.

By reason of the debt incurred to finance the cash portion of the consideration for the Mergers, the combined company will have a considerably higher level of indebtedness than Teledyne and FLIR currently have in the aggregate, and there can be no assurance that the credit ratings of the existing Teledyne debt or the existing FLIR debt will not be subject to a downgrade below investment grade. If a ratings downgrade were to occur or if the combined company fails to obtain an investment grade rating, the combined company could experience higher borrowing costs in the future and more restrictive debt covenants, which would reduce profitability and diminish operational flexibility. Specifically, in the event that FLIR’s existing senior notes are downgraded

 

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below investment grade as a result of the Mergers, the terms of these notes will require the combined company to commence a change of control offer after the closing of the Mergers.

Because of higher debt levels, Teledyne may not be able to service its debt obligations in accordance with their terms after the completion of the Mergers.

Teledyne’s ability to meet its expense and debt service obligations contained in the agreements Teledyne expects to enter into with respect to the indebtedness Teledyne will incur to finance the Mergers will depend on Teledyne’s available cash and its future performance, which will be affected by financial, business, economic and other factors, including potential changes in laws or regulations, industry conditions, industry supply and demand balance, customer preferences, the success of Teledyne’s products and pressure from competitors. If Teledyne is unable to meet its debt service obligations after the Mergers or should Teledyne fail to comply with its financial and other negative covenants contained in the agreements governing its indebtedness, Teledyne may be required to refinance all or part of its debt, sell important strategic assets at unfavorable prices, incur additional indebtedness or issue common stock or other equity securities. Teledyne may not be able to, at any given time, refinance its debt, sell assets, incur additional indebtedness or issue equity securities on terms acceptable to Teledyne, in amounts sufficient to meet Teledyne’s needs. If Teledyne is able to raise additional funds through the issuance of equity securities, such issuance would also result in dilution to Teledyne stockholders. Teledyne’s inability to service its debt obligations or refinance its debt could have a material and adverse effect on its business, financial condition or operating results after the Mergers. In addition, Teledyne’s debt obligations may limit its ability to make required investments in capacity, technology or other areas of its business, which could have a material adverse effect on its business, financial condition or operating results.

The Teledyne Bylaws, and therefore the combined company, designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain lawsuits between Teledyne and its stockholders, which could limit stockholders’ ability to obtain a judicial forum that it finds favorable for such lawsuits and make it more costly for stockholders to bring such lawsuits, which may have the effect of discouraging such lawsuits.

The Teledyne Bylaws provide that, unless it consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be, to the fullest extent permitted by law, the sole and exclusive forum for any (i) derivative action or proceeding brought on behalf of Teledyne, (ii) action asserting a claim of breach of a fiduciary duty owed by any of Teledyne’s directors, officers, employees or agents to Teledyne or its stockholders, (iii) action asserting a claim arising pursuant to any provision of the DGCL, the Teledyne Certificate of Incorporation or the Teledyne Bylaws, (iv) any action to interpret, apply, enforce or determine the validity of the Teledyne Certificate of Incorporation or the Teledyne Bylaws or (v) action asserting a claim governed by the internal affairs doctrine. The Teledyne Bylaws also provide that any person or entity purchasing or otherwise acquiring or holding any interest in shares of Teledyne’s capital stock will be deemed to have notice of and consented to this forum selection provision.

However, this forum selection provision is not intended to apply to any actions brought under the Securities Act or the Exchange Act. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Accordingly, the forum selection provision in the Teledyne Bylaws will not relieve Teledyne of its duties to comply with the federal securities laws and the rules and regulations thereunder, and its stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.

Nevertheless, this forum selection provision in the Teledyne Bylaws may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of Teledyne’s directors, officers and other employees, which may discourage lawsuits with respect to such claims, although Teledyne’s stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and

 

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regulations thereunder. In addition, stockholders who do bring a claim in the Court of Chancery in the State of Delaware could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. While Teledyne believes the risk of a court declining to enforce the forum selection provision contained in the Teledyne Bylaws is low, if a court were to find the provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, it may incur additional costs associated with resolving such action in other jurisdictions, which could harm Teledyne’s business, operating results and financial condition.

Risks Relating to Teledyne

Teledyne is, and will continue to be, subject to the risks described in Part I, Item 1A, “Risk Factors” in Teledyne’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021 filed with the SEC on February 26, 2021 and subsequent filings with the SEC, in each case, which are incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus.

Risks Relating to FLIR

FLIR is, and the surviving entity after the Second Merger will continue to be, subject to many of the risks described in Part I, Item 1A, “Risk Factors” in FLIR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC on February 25, 2021 and subsequent filings with the SEC, in each case, which are incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This joint proxy statement/prospectus, including the information included or incorporated by reference, contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements include statements that refer to expectations, projections, or other characterizations of future events or circumstances and are identified by words such as “believe,” “anticipate,” “expect,” “estimate,” “assume,” “intend,” “plan,” “forecast,” “explore,” “predict,” “project,” “view,” “will,” “may,” “might,” “aim,” “target,” “intend,” “can,” “could,” “should,” “continue,” “build,” “improve,” “growth,” “increase,” “probably,” “potential,” “strategy,” “seek,” “objective” or the negatives thereof and other similar expressions. These forward-looking statements include, but are not limited to, statements about the anticipated benefits of the Mergers, including future financial and operating results and performance, statements about the plans, objectives, expectations and intentions of Teledyne, FLIR or the combined company with respect to future operations, products and services, financial projections and expected timing of completion of the Mergers.

These forward-looking statements, which reflect Teledyne’s and FLIR’s management’s beliefs, objectives and expectations as of the date of this joint proxy statement/prospectus, or in the case of any information included or incorporated by reference, as of the date of those documents, are based on forecasts of future results and estimates of amounts not yet determinable. Achievement of the expressed beliefs, objectives and expectations is subject to risks and uncertainties. Accordingly, actual results may differ materially from those expressed in, or implied by, the forward-looking statements. Some of the factors that could cause actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, forward-looking statements include, without limitation:

 

   

ongoing challenges and uncertainties posed by the COVID-19 pandemic for businesses and governments around the world;

 

   

the risk that the Mergers or other transactions contemplated by the Merger Agreement may not be consummated in the expected timeframe or at all;

 

   

changes in the value of Teledyne Common Stock and therefore, the value of the merger consideration prior to the consummation of the Merger;

 

   

the occurrence of any event, change or other circumstances that could give rise to the right of Teledyne or FLIR or both to terminate the Merger Agreement;

 

   

the inability to retain, motivate and attract executives and other employees;

 

   

the disruption of the attention of Teledyne’s and FLIR’s management from ongoing business operations during the pendency of the Mergers;

 

   

uncertainties as to the timing of the consummation of the Mergers and the ability of Teledyne and FLIR to consummate the Mergers;

 

   

the satisfaction or waiver of conditions necessary to close the Mergers, including approval by Teledyne stockholders of the Teledyne Share Issuance Proposal and approval by the FLIR stockholders of the FLIR Merger Proposal;

 

   

the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) on a timely basis or at all;

 

   

disruption to third-party business relationships resulting from uncertainty associated with the Mergers;

 

   

the possibility that failure to complete the Mergers could negatively impact the stock prices and future business and financial results of Teledyne and FLIR, including as a result of unexpected factors or events or the payment of termination fees;

 

   

restrictions on the respective business activities of Teledyne and FLIR while the Mergers are pending;

 

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potential litigation challenging the Mergers that could be instituted against Teledyne, FLIR or their respective directors;

 

   

significant transaction and merger-related costs to be incurred by Teledyne and FLIR;

 

   

the possibility that currently expected earnings accretion from the Mergers will be reduced or delayed;

 

   

the ability of Teledyne to integrate FLIR’s business and realize the anticipated benefits and cost savings of the Mergers;

 

   

the expected financial performance of the combined company following the consummation of the Mergers, which may differ significantly from the unaudited pro forma condensed combined financial statements contained in this joint proxy statement/prospectus;

 

   

the failure to effectively manage the operations of the combined company following the Mergers;

 

   

the impact of public health crises, such as pandemics (including the COVID-19 pandemic) and epidemics and any related company or government policies and actions intended to protect the health and safety of individuals or government policies or actions intended to maintain the functioning of national or global economies and markets; and

 

   

the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement.

Additional factors that could cause Teledyne’s and FLIR’s results to differ materially from those described in the forward-looking statements can be found in Teledyne’s and FLIR’s filings with the SEC, including Teledyne’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021 and FLIR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

You are cautioned not to place undue reliance on Teledyne’s and FLIR’s forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus or the date of any information included or incorporated by reference in this joint proxy statement/prospectus. All subsequent written and oral forward-looking statements concerning the Mergers or other matters addressed in this joint proxy statement/prospectus and attributable to Teledyne or FLIR or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, Teledyne and FLIR undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this joint proxy statement/prospectus or to reflect the occurrence of unanticipated events.

 

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THE COMPANIES

Teledyne Technologies Incorporated

Teledyne provides enabling technologies for industrial growth markets that require advanced technology and high reliability. These markets include aerospace and defense, factory automation, air and water quality environmental monitoring, electronics design and development, oceanographic research, deepwater oil and gas exploration and production, medical imaging and pharmaceutical research. Teledyne’s products include digital imaging sensors, cameras and systems within the visible, infrared and X-ray spectra, monitoring and control instrumentation for marine and environmental applications, harsh environment interconnects, electronic test and measurement equipment, aircraft information management systems, and defense electronics and satellite communication subsystems. Teledyne also supplies engineered systems for defense, space, environmental and energy applications. Teledyne differentiates itself from many of its direct competitors by having a customer and company-sponsored applied research center that augments its product development expertise.

Teledyne’s strategy continues to emphasize growth in its core markets of instrumentation, digital imaging, aerospace and defense electronics and engineered systems. Teledyne’s core markets are characterized by specialized products and services not likely to be commoditized. Teledyne intends to strengthen and expand its core businesses with targeted acquisitions and through product development. Teledyne continues to focus on balanced and disciplined capital deployment among capital expenditures, product development, acquisitions and share repurchases. Teledyne aggressively pursues operational excellence to continually improve its margins and earnings by emphasizing cost containment and cost reductions in all aspects of Teledyne’s business. At Teledyne, operational excellence includes the rapid integration of the businesses Teledyne acquires. Using complementary technology across its businesses and internal research and development, Teledyne seeks to create new products to grow its company and expand its addressable markets. Teledyne continues to evaluate its businesses to ensure that they are aligned with Teledyne’s strategy.

Teledyne, a Delaware corporation, spun off from Allegheny Technologies Incorporated as an independent public company on November 29, 1999. Teledyne Common Stock is traded on the NYSE under the symbol “TDY.” The principal executive offices of Teledyne are located at 1049 Camino Dos Rios, Thousand Oaks, California 91360; its telephone number is (805) 373-4545; and its website is www.teledyne.com. The information contained in, or that can be accessed through, Teledyne’s website is not part of this joint proxy statement/prospectus or the documents incorporated by reference herein.

This joint proxy statement/prospectus incorporates important business and financial information about Teledyne from other documents that are not included in or delivered with this joint proxy statement/prospectus. For a list of the documents that are incorporated by reference in this joint proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus.

FLIR Systems, Inc.

FLIR is a world leader in developing technologies that enhance perception and awareness. FLIR designs, develops, markets, and distributes solutions that detect people, objects and substances that may not be perceived by human senses and improve the way people interact with the world around them. FLIR brings these innovative technologies into daily life in ways that help save lives and livelihoods. FLIR technologies include thermal imaging systems, visible-light imaging systems, locater systems, measurement and diagnostic systems, and advanced threat-detection solutions.

Founded in 1978, FLIR is a pioneer in advanced sensors and integrated sensor systems that enable the gathering, measurement, and analysis of critical information through a wide variety of applications in government, industrial and commercial markets worldwide. FLIR offers a broad range of infrared, also known as thermal, imaging solutions, with products that range from professional-use thermal camera smartphone accessories to highly advanced aircraft-mounted imaging systems for military and search and rescue applications, with products in between serving a multitude of markets, customers, and applications. As the cost of thermal

 

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imaging technology has decreased, FLIR’s opportunities to increase the adoption of thermal technology and create new markets for the technology have expanded. In order to better serve the customers in these markets, FLIR has augmented its thermal product offerings with complementary sensing technologies, such as visible imaging, radar, laser, sonar, chemical sensing, and environmental sensing technologies.

FLIR’s goal is both to enable its customers to benefit from the valuable information produced by advanced sensing technologies and to deliver sustained superior financial performance for FLIR stockholders. FLIR creates value for its customers by improving personal and public safety and security, providing advanced intelligence, surveillance, reconnaissance, and tactical defense capabilities, facilitating air, ground, and maritime-based situational awareness, detecting electrical, mechanical and building envelope problems, displaying process irregularities, detecting volatile organic gas emissions, and enhancing advanced driver-assistance systems and autonomous driving solutions, as well as a variety of other uses of thermal and other sensing technologies.

FLIR’s business model and range of solutions allow it to sell products to various end markets, including industrial, original equipment manufacturing, military, homeland security, enterprise, infrastructure, and environmental. FLIR sells off-the-shelf products and customized solutions in configurations to suit specific customer requirements in an efficient, timely, and affordable manner, and supports those customers with training and ongoing support and services. Centered on the design of products for low-cost manufacturing and high-volume distribution, FLIR’s commercial operating model has been developed over time and provides us with a unique ability to adapt to market changes and meet FLIR’s customers’ needs. Because FLIR aggregates product demand and production across these markets, FLIR can generate significant volume; this volume drives down cost, which then increases demand, enabling a virtuous cycle of lower prices and higher unit volumes. FLIR’s manufacturing and supply processes are vertically integrated, minimizing lead times, facilitating prompt delivery, controlling costs and ensuring that components satisfy FLIR’s high quality standards.

FLIR has evolved its product suite over time, expanding FLIR’s reach into markets that are adjacent to thermal imaging, with the intent of expanding the adoption and channel development for thermal imaging technology. Examples of this evolution include FLIR’s entrance into the visible-image security and surveillance market, the industrial machine vision market, and the traffic monitoring and signal control market. FLIR intends to maintain this evolution as FLIR continues to lower the cost of advanced sensing products. As the cost to own thermal technology continues to decline, the application of these sensors is expanding beyond imaging to areas such as data acquisition where thermal sensors can provide important data that can be used for a wide variety of applications.

FLIR believes that its brand is known for quality, innovation and trust and that customers are drawn to it for products and solutions that are effective, innovative, easy to use, and sold at competitive market prices. FLIR intends to: continue to reduce the cost of thermal technology through higher volumes and new product and process improvements; innovate new applications and form-factors for FLIR’s technology based on customer feedback; improve the customer experience through improved user-interface, ease-of-use, and software; increase customer loyalty and trust by providing world-class product warranties and support; and improve operational processes to realign resources to be nimble in response to customers’ needs and market trends.

FLIR Systems, Inc. was originally incorporated as an Oregon corporation, and was subsequently reincorporated as a Delaware corporation in 2020. FLIR Common Stock is traded on NASDAQ under the symbol “FLIR.” The principal executive offices of FLIR are located at 27700 SW Parkway Avenue, Wilsonville, Oregon 97070, and the telephone number at this location is (503) 498-3547. Information about FLIR is available on FLIR’s website at www.flir.com. The information contained in, or that can be accessed through, FLIR’s website is not part of this joint proxy statement/prospectus or the documents incorporated by reference herein.

Additional information about FLIR is included in documents incorporated by reference into this joint proxy statement/prospectus. For a list of documents that are incorporated by reference into this joint proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus.

 

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Firework Merger Sub I, Inc.

Merger Sub I is a wholly owned subsidiary of Teledyne. Merger Sub I was formed solely for the purpose of completing the Mergers. Merger Sub I has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the Mergers.

Merger Sub I was incorporated in the State of Delaware on December 30, 2020. The principal executive offices of Merger Sub I are located at 1049 Camino Dos Rios, Thousand Oaks, California 91360, and its telephone number is (805) 373-4545.

Firework Merger Sub II, LLC

Merger Sub II is a wholly owned subsidiary of Teledyne. Merger Sub II was formed solely for the purpose of completing the Mergers. Merger Sub II has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the Mergers. At the Effective Time, it is expected that as the surviving company its name will be changed to “Teledyne FLIR, LLC.”

Merger Sub II was formed in the State of Delaware on December 30, 2020. The principal executive offices of Merger Sub II are located at 1049 Camino Dos Rios, Thousand Oaks, California 91360, and its telephone number is (805) 373-4545.

 

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THE TELEDYNE SPECIAL MEETING

This joint proxy statement/prospectus is being provided to Teledyne stockholders as part of a solicitation of proxies by the Teledyne Board for use at the Teledyne Special Meeting. This joint proxy statement/prospectus contains important information regarding the Teledyne Special Meeting, the proposals on which Teledyne stockholders are being asked to vote, considerations that Teledyne stockholders may find useful in determining how to vote and voting procedures.

 

Date, Time and Place

The Teledyne Special Meeting will be held on May 13, 2021, at 9:00 a.m. Pacific Time via a live interactive audio webcast on the Internet at www.meetingcenter.io/284418380.

 

Purpose of the Teledyne Special Meeting

The Teledyne Special Meeting will be held for the purpose of considering and voting on the following matters:

 

  Teledyne Proposal No. 1—The Teledyne Share Issuance Proposal (Item 1 on the Teledyne proxy card). To approve the Share Issuance in connection with the transactions contemplated by the Merger Agreement.

 

  Teledyne Proposal No. 2—The Teledyne Adjournment Proposal (Item 2 on the Teledyne proxy card). To approve one or more adjournments of the Teledyne Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Teledyne Share Issuance Proposal at the time of the Teledyne Special Meeting.

 

  The Teledyne Board recommends that Teledyne stockholders vote “FOR” each of the proposals presented at the Teledyne Special Meeting.

 

Who Can Vote at the Teledyne Special Meeting

The Teledyne Board has fixed the close of business on April 9, 2021 as the record date for the determination of stockholders entitled to notice of and to vote at the Teledyne Special Meeting.

 

  Only Teledyne stockholders of record at the close of business on the Teledyne Record Date are entitled to receive notice of, attend and vote the shares of Teledyne Common Stock that they held on that date at the Teledyne Special Meeting or at any adjournment of the meeting.

 

  At the close of business on the Teledyne Record Date, there were 37,063,413 shares of Teledyne Common Stock issued and entitled to vote, held by approximately 2,621 holders of record.

 

Attending and Voting at the Teledyne Special Meeting

Stockholders eligible to vote at the Teledyne Special Meeting, or their duly authorized proxies, may attend the Teledyne Special Meeting. Due to the public health impact from the COVID-19 pandemic and to

 

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protect the well-being of its stockholders, employees and other meeting participants, Teledyne will not hold an in-person special meeting. Instead, Teledyne will hold a virtual special meeting.

 

  If you are a holder of record (i.e., you hold your shares in your own name as reflected in the records of Teledyne’s transfer agent, Computershare) at the close of business on the Teledyne Record Date, you can attend the meeting by accessing www.meetingcenter.io/284418380 and entering the 16-digit control number on the proxy card accompanying this joint proxy statement/prospectus. The meeting password is TDY2021.

 

  If you are a beneficial holder of Teledyne Common Stock (i.e. you hold your shares in “street name” through an intermediary, such as a bank, broker or other nominee) at the close of business on the Teledyne Record Date, you must register in advance to virtually attend the Teledyne Special Meeting. To register, you must obtain a legal proxy, executed in your favor, from the holder of record and submit proof of your legal proxy reflecting the number of shares of Teledyne Common Stock you held as of the Teledyne Record Date, along with your name and email address, to Computershare. Please forward the email from your broker, or attach an image of your legal proxy to legalproxy@computershare.com. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m. Eastern Time on May 6, 2021. You will then receive a confirmation of your registration, with a control number, by email from Computershare. At the time of the meeting, go to www.meetingcenter.io/284418380 and enter your control number and the meeting password TDY2021.

 

Vote Required for the Proposals

Teledyne Proposal No. 1—The Teledyne Share Issuance Proposal (Item 1 on the Teledyne proxy card). Approval of the Teledyne Share Issuance Proposal requires the affirmative vote of a majority of the votes cast, electronically at the Teledyne Special Meeting or by proxy.

 

  Teledyne Proposal No. 2—The Teledyne Adjournment Proposal (Item 2 on the Teledyne proxy card). Approval of one or more adjournments of the Teledyne Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Teledyne Share Issuance Proposal at the time of the Teledyne Special Meeting, requires the affirmative vote of a majority of the votes cast, electronically at the Teledyne Special Meeting or by proxy.

 

Quorum Requirement

In order to transact business at the Teledyne Special Meeting, it is necessary to have a quorum of Teledyne stockholders entitled to vote as of the Teledyne Record Date. The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of Teledyne Common Stock outstanding as of close of business on the Teledyne Record Date will constitute a quorum. Virtual attendance at

 

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the Teledyne Special Meeting constitutes presence in person for quorum purposes at the Teledyne Special Meeting. As of April 9, 2021, the Teledyne Record Date for the Teledyne Special Meeting, 37,063,413 shares of Teledyne Common Stock were outstanding. Both abstentions and broker non-votes will be included in the calculation of the number of shares considered present at the Teledyne Special Meeting for purposes of establishing a quorum. In the event that a quorum is not present at the Teledyne Special Meeting, Teledyne expects that the Teledyne Special Meeting will be adjourned to solicit additional proxies.

 

Shares Owned by Teledyne Directors and Executive Officers

At the close of business on April 9, 2021, the Teledyne Record Date for the Teledyne Special Meeting, directors and executive officers of Teledyne beneficially owned in the aggregate, approximately 1,182,999 issued and outstanding shares of Teledyne Common Stock, representing approximately 3.2% of the shares of Teledyne Common Stock outstanding on that date. The directors and executive officers of Teledyne have informed Teledyne that they intend to vote all of the shares of Teledyne Common Stock they are entitled to vote (i) “FOR” the Teledyne Share Issuance Proposal and (ii) “FOR” the Teledyne Adjournment Proposal.

 

Methods of Voting—Stockholders of Record

If you are a Teledyne stockholder entitled to vote at the Teledyne Special Meeting, you may vote by proxy over the Internet, by telephone or by mail or vote electronically at the Teledyne Special Meeting. All votes, other than votes made electronically at the Teledyne Special Meeting, must be received by 11:59 p.m. Eastern Time on May 12, 2021.

 

  Over the Internet or by Telephone. To vote over the Internet or by telephone, please follow the instructions included on your proxy card. If you vote over the Internet or by telephone, you do not need to complete and mail a proxy card. By voting over the Internet or by telephone, you are authorizing the individuals named on the proxy card to vote your shares at the Teledyne Special Meeting in the manner you indicate.

 

  Mail. By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the Teledyne Special Meeting in the manner you indicate. The Teledyne Board encourages you to sign and return the proxy card even if you plan to attend the Teledyne Special Meeting so that your shares will be voted if you are ultimately unable to attend the Teledyne Special Meeting. If you receive more than one proxy card, it may be an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted.

 

 

Electronically at the Teledyne Special Meeting. If your shares are registered directly in your name, you have the right to vote electronically at the Teledyne Special Meeting by following the

 

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instructions above under “—Attending and Voting at the Teledyne Special Meeting.” If you hold shares of Teledyne Common Stock in “street name” through a broker, bank or other nominee and you want to vote electronically at the Teledyne Special Meeting, you must register in advance to virtually attend the Teledyne Special Meeting by following the instructions above.

 

  The Teledyne Board recommends that you vote by proxy in advance even if you plan to attend the meeting so that Teledyne will know as soon as possible that enough votes will be present for Teledyne to hold the meeting. If you are a stockholder of record and attend the meeting, you may vote electronically at the meeting.

 

Methods of Voting—Beneficial Owners

If your shares are held in an account at a bank, broker or other nominee, then you are the beneficial owner of shares held in “street name,” and this joint proxy statement/prospectus is being sent to you by that organization. The organization holding your account is considered to be the stockholder of record entitled to vote at the Teledyne Special Meeting. As a beneficial owner, you have the right to direct your broker, bank or other nominee regarding how to vote the shares in your account by following the instructions that the broker, bank or other nominee provides you along with this joint proxy statement/prospectus. If you, as a beneficial owner, want to attend and vote your shares at the Teledyne Special Meeting, you must register in advance as described above under “—Attending and Voting at the Teledyne Special Meeting.” Brokers do not have discretionary voting power with respect to the approval of matters determined to be “non-routine” without specific instructions from the beneficial owner. Broker non-votes occur when a broker is not instructed by the beneficial owner of shares to vote on a particular proposal for which the broker does not have discretionary voting power. All of the proposals at the Teledyne Special Meeting are considered non-routine matters. As a result, your broker cannot vote your shares without your specific instructions.

 

Abstentions

Abstentions, which occur when shares are voted “ABSTAIN” with respect to one or more proposals, will not be counted as votes cast on, and will have no effect on the outcome of, either the Teledyne Share Issuance Proposal (Teledyne Proposal No. 1) or the Teledyne Adjournment Proposal (Teledyne Proposal No. 2).

 

Failure to Submit a Proxy or Vote Electronically at the Special Meeting; Broker Non-Votes

Failure to submit a proxy or vote electronically at the Teledyne Special Meeting and broker non-votes, if any, will have no effect on the outcome of either the Teledyne Share Issuance Proposal (Teledyne Proposal No. 1) or the Teledyne Adjournment Proposal (Teledyne Proposal No. 2).

 

Failure to Provide Voting Instructions

Stockholders should specify their choice for each matter on the enclosed proxy card. If no specific instructions are given, proxies that

 

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are signed and returned will be voted (i) “FOR” the Teledyne Share Issuance Proposal and (ii) “FOR” the Teledyne Adjournment Proposal.

 

  If you grant a proxy, the persons named as proxy holders on the enclosed proxy card will vote your shares on any additional matters properly presented for a vote at the meeting as recommended by the Teledyne Board or, if no recommendation is given, in their own discretion.

 

Revoking a Proxy

If you are a stockholder entitled to vote at the Teledyne Special Meeting, you may revoke your proxy at any time before the vote is taken at the Teledyne Special Meeting. To revoke your proxy, you must do one of the following:

 

   

enter a new vote over the Internet or by telephone by 11:59 p.m. Eastern Time on May 12, 2021;

 

   

sign and return another proxy card, which must be received by 11:59 p.m. Eastern Time on May 12, 2021;

 

   

provide written notice of the revocation to: Teledyne Technologies Incorporated, Attention: Melanie S. Cibik, Teledyne’s Senior Vice President, General Counsel, Chief Compliance Officer and Secretary, 1049 Camino Does Rios, Thousand Oaks, California 91360, which must be received by 11:59 p.m. Eastern Time on May 12, 2021; or

 

   

attend the Teledyne Special Meeting and vote your shares electronically.

 

  If you are the beneficial owner of shares held in “street name” by a bank, broker or other nominee, you should follow the instructions of your bank, broker or other nominee regarding the revocation of proxies. If you hold shares in the Teledyne Technologies Incorporated 401(k) Plan, your voting instructions to the trustee of the Teledyne Technologies Incorporated 401(k) Plan must be received by 11:59 p.m. Eastern Time on May 10, 2021.

 

Solicitation of Proxies

The solicitation of proxies from Teledyne stockholders is made on behalf of the Teledyne Board. Teledyne and FLIR will equally share the costs and expenses of printing and mailing this joint proxy statement/prospectus. Teledyne has retained Georgeson LLC to assist in the solicitation of proxies. Solicitations may be made personally or by mail, facsimile, telephone, messenger or over the Internet. In addition to Georgeson LLC’s proxy solicitation fee of $15,000 plus reasonable out-of-pocket expenses for this service, Teledyne will reimburse brokerage firms and other custodians for their reasonable out-of-pocket expenses for forwarding the proxy materials to stockholders. Directors, officers and employees of Teledyne may also solicit proxies in person, by telephone or by other means of communication. Directors, officers and employees of Teledyne will not be paid any additional compensation for soliciting proxies.

 

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TELEDYNE PROPOSAL NO. 1:

THE TELEDYNE SHARE ISSUANCE PROPOSAL

The issuance of shares of Teledyne Common Stock in connection with the transactions contemplated by the Merger Agreement and the Mergers is subject to approval by Teledyne stockholders as required by applicable rules of the NYSE. If the Teledyne Share Issuance Proposal is approved by Teledyne stockholders and the conditions to consummating the Mergers as set forth in the Merger Agreement are satisfied or waived, at the Effective Time, each issued and outstanding share of FLIR Common Stock will be converted into the right to receive (i) $28.00 in cash and (ii) 0.0718 shares of Teledyne Common Stock. For a detailed discussion of the terms and conditions of the Mergers, see “The Mergers” beginning on page 64 of this joint proxy statement/prospectus.

Under NYSE listing rules, a company listed on the NYSE is required to obtain stockholder approval for an acquisition of another company if the potential issuance of the listed company’s common stock, other than a public offering for cash, may equal or exceed 20% of the voting power or the total shares outstanding on a pre-transaction basis. The aggregate number of shares of Teledyne Common Stock to be issued in the Merger is expected to be approximately 9.7 million (or approximately 26.3% of the shares of Teledyne Common Stock outstanding before such issuance) based on the number of shares of FLIR Common Stock, FLIR equity awards and Teledyne Common Stock outstanding as of March 1, 2021, the last practicable trading day before the date of this joint proxy statement/prospectus. For this reason, Teledyne must obtain the approval of Teledyne stockholders for the Teledyne Share Issuance Proposal. Teledyne is asking its stockholders to approve the Teledyne Share Issuance Proposal, which is required for the consummation of the Merger.

The affirmative vote of a majority of the votes cast, electronically at the Teledyne Special Meeting or by proxy, is required for the approval of the Teledyne Share Issuance Proposal. Abstentions, failures to submit a proxy or vote electronically at the Teledyne Special Meeting and broker non-votes, if any, will not be counted as votes cast on, and will have no effect on the outcome of, the Teledyne Share Issuance Proposal.

The Teledyne Board recommends that Teledyne stockholders vote “FOR” the Teledyne Share Issuance Proposal.

 

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TELEDYNE PROPOSAL NO. 2:

THE TELEDYNE ADJOURNMENT PROPOSAL

Teledyne is asking its stockholders to vote in favor of a proposal to approve one or more adjournments of the Teledyne Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Teledyne Share Issuance Proposal at the time of the Teledyne Special Meeting. If Teledyne stockholders approve the Teledyne Adjournment Proposal, Teledyne could adjourn the Teledyne Special Meeting, and any adjourned session of the Teledyne Special Meeting, and use the additional time to solicit additional proxies, including the solicitation of proxies from stockholders that have previously returned properly executed proxies voting against the approval of the Teledyne Share Issuance Proposal. Among other things, approval of the Teledyne Adjournment Proposal could mean that, even if Teledyne had received proxies representing a sufficient number of votes against the proposal to approve the Teledyne Share Issuance Proposal, such that the Teledyne Share Issuance Proposal would be defeated, Teledyne could adjourn the Teledyne Special Meeting without holding a vote on the Teledyne Share Issuance Proposal and seek to convince the holders of those shares to change their votes to votes in favor of that proposal.

Approval of the Teledyne Adjournment Proposal requires the affirmative vote of a majority of the votes cast, electronically at the Teledyne Special Meeting or by proxy. In addition, even if a quorum does not exist, holders of a majority of the shares of Teledyne Common Stock present at the Teledyne Special Meeting, electronically at the Teledyne Special Meeting or by proxy, may adjourn the meeting to another place, date or time. Abstentions, failures to submit a proxy or vote electronically at the Teledyne Special Meeting and broker non-votes, if any, will not be counted as votes cast on, and will have no effect on the outcome of, the Teledyne Adjournment Proposal.

The Teledyne Board recommends that Teledyne stockholders vote “FOR” the Teledyne Adjournment Proposal.

 

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THE FLIR SPECIAL MEETING

This joint proxy statement/prospectus is being provided to FLIR stockholders as part of a solicitation of proxies by the FLIR Board for use at the FLIR Special Meeting. This joint proxy statement/prospectus contains important information regarding the FLIR Special Meeting, the proposals on which FLIR stockholders are being asked to vote, considerations that FLIR stockholders may find useful in determining how to vote and voting procedures.

 

Date, Time and Place

The FLIR Special Meeting will be held on May 13, 2021, at 9:00 a.m. Eastern Time via a live interactive audio webcast on the Internet.

 

Purpose of the FLIR Special Meeting

The FLIR Special Meeting will be held for the purpose of considering and voting on the following matters:

 

  FLIR Proposal No. 1—The FLIR Merger Proposal (Item 1 on the FLIR proxy card). To adopt the Merger Agreement.

 

  FLIR Proposal No. 2—The FLIR Advisory Executive Compensation Proposal (Item 2 on the FLIR proxy card). To approve, on a non-binding, advisory basis, the compensation that will or may become payable to FLIR’s named executive officers in connection with the Mergers.

 

  FLIR Proposal No. 3—The FLIR Adjournment Proposal (Item 3 on the FLIR proxy card). To approve one or more adjournments of the FLIR Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the FLIR Merger Proposal at the time of the FLIR Special Meeting.

 

  The FLIR Board recommends that FLIR stockholders vote “FOR” each of the proposals presented at the FLIR Special Meeting.

 

Who Can Vote at the FLIR Special Meeting

The FLIR Board has fixed the close of business on April 7, 2021 as the record date for the determination of stockholders entitled to notice of and to vote at the FLIR Special Meeting.

 

  Only FLIR stockholders of record at the close of business on the FLIR Record Date are entitled to receive notice of, attend and vote the shares of FLIR Common Stock that they held on that date at the FLIR Special Meeting or at any adjournment of the meeting.

 

  At the close of business on the FLIR Record Date, there were 131,425,675 shares of FLIR Common Stock issued and entitled to vote, held by approximately 174 holders of record.

 

Attending and Voting at the FLIR Special Meeting

Stockholders eligible to vote at the FLIR Special Meeting, or their duly authorized proxies, may attend the FLIR Special Meeting. Due

 

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to the public health impact from the COVID-19 pandemic and to protect the well-being of its stockholders, employees and other meeting participants, FLIR will not hold an in-person special meeting. Instead, FLIR will hold a virtual special meeting.

 

  If you are a holder of record (i.e., you hold your shares in your own name as reflected in the records of FLIR’s transfer agent, Computershare) on the FLIR Record Date, you can attend the meeting by registering at www.proxydocs.com/FLIR and using the control number on the proxy card accompanying this joint proxy statement/prospectus. Upon completing your registration, you will receive further instructions via email, including your unique link that will allow you to access the FLIR Special Meeting.

 

  If you are a beneficial holder of FLIR Common Stock (i.e. you hold your shares in “street name” through an intermediary, such as a bank, broker or other nominee) on the FLIR Record Date, you must contact your bank, broker or other nominee and request a document called a “legal proxy” to be eligible to vote during the meeting. To attend the FLIR Special Meeting, you must register in advance of the meeting at www.proxydocs.com/FLIR using the control number on the voting instruction form accompanying this joint proxy statement/prospectus. Upon completing your registration, you will receive further instructions via email, including your unique link that will allow you to access the Special Meeting.

 

Vote Required for the Proposals

FLIR Proposal No. 1—The FLIR Merger Proposal (Item 1 on the FLIR proxy card). Approval of the FLIR Merger Proposal requires the affirmative vote of a majority of the outstanding shares of FLIR Common Stock entitled to vote as of the FLIR Record Date, electronically at the FLIR Special Meeting or by proxy.

 

  FLIR Proposal No. 2—The FLIR Advisory Executive Compensation Proposal (Item 2 on the FLIR proxy card). Approval of the FLIR Advisory Executive Compensation Proposal requires the affirmative vote of a majority of votes cast, electronically at the FLIR Special Meeting or by proxy.

 

  FLIR Proposal No. 3—The FLIR Adjournment Proposal (Item 3 on the FLIR proxy card). Approval of the FLIR Adjournment Proposal requires the affirmative vote of a majority of the votes cast, electronically at the FLIR Special Meeting or by proxy.

 

Quorum Requirement

In order to transact business at the FLIR Special Meeting, it is necessary to have a quorum of FLIR stockholders entitled to vote as of the FLIR Record Date. The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of FLIR Common Stock outstanding as of close of business on the FLIR Record Date will constitute a quorum. Virtual attendance at the FLIR Special Meeting constitutes presence in person for quorum purposes at the FLIR Special Meeting. As of April 7, 2021, the FLIR Record Date for the FLIR Special Meeting, 131,425,675 shares of FLIR Common Stock were outstanding. Both abstentions and broker non-votes will

 

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be included in the calculation of the number of shares considered present at the FLIR Special Meeting for purposes of establishing a quorum. In the event that a quorum is not present at the FLIR Special Meeting, FLIR expects that the FLIR Special Meeting will be adjourned to solicit additional proxies.

 

Shares Owned by FLIR Directors and Executive Officers

At the close of business on April 7, 2021, the FLIR Record Date for the FLIR Special Meeting, directors and executive officers of FLIR beneficially owned and were entitled to vote, in the aggregate, approximately 1,160,579 issued and outstanding shares of FLIR Common Stock, representing approximately 0.9% of the shares of FLIR Common Stock outstanding on that date. The directors and executive officers of FLIR have informed FLIR that they intend to vote all of the shares of FLIR Common Stock they are entitled to vote (i) FOR the FLIR Merger Proposal, (ii) FOR the FLIR Advisory Executive Compensation Proposal and (iii) FOR the FLIR Adjournment Proposal.

 

Methods of Voting—Stockholders of Record

If you are a FLIR stockholder entitled to vote at the FLIR Special Meeting, you may vote by proxy over the Internet, by telephone or by mail or vote electronically at the FLIR Special Meeting. All votes, other than votes made electronically at the FLIR Special Meeting, must be received by 11:59 p.m. Eastern Time on May 12, 2021.

 

  Over the Internet or by Telephone. To vote over the Internet or by telephone, please follow the instructions included on your proxy card. If you vote over the Internet or by telephone, you do not need to complete and mail a proxy card. By voting over the Internet or by telephone, you are authorizing the individuals named on the proxy card to vote your shares at the FLIR Special Meeting in the manner you indicate.

 

  Mail. By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the FLIR Special Meeting in the manner you indicate. The FLIR Board encourages you to sign and return the proxy card even if you plan to attend the FLIR Special Meeting so that your shares will be voted if you are ultimately unable to attend the FLIR Special Meeting. If you receive more than one proxy card, it may be an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted.

 

  Electronically at the FLIR Special Meeting. If your shares are registered directly in your name, you have the right to vote electronically at the FLIR Special Meeting by following the instructions above under “—Attending and Voting at the FLIR Special Meeting.” If you hold shares of FLIR Common Stock in “street name” through a broker, bank or other nominee and you want to vote electronically at the FLIR Special Meeting, you must register in advance to virtually attend the FLIR Special Meeting by following the instructions above.

 

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  The FLIR Board recommends that you vote in advance by proxy even if you plan to attend the meeting so that FLIR will know as soon as possible that enough shares will be present for FLIR to hold the meeting. If you are a stockholder of record and attend the meeting, you may vote electronically at the meeting.

 

Methods of Voting—Beneficial Owners

If your shares are held in an account at a brokerage firm, bank or other nominee, then you are the beneficial owner of shares held in “street name,” and this joint proxy statement/prospectus is being sent to you by that organization. The organization holding your account is considered to be the stockholder of record entitled to vote at the FLIR Special Meeting. As a beneficial owner, you have the right to direct your broker, bank or other nominee regarding how to vote the shares in your account by following the instructions that the broker, bank or other nominee provides you along with this joint proxy statement/prospectus. If you, as a beneficial owner, want to attend and vote your shares at the FLIR Special Meeting, you must register in advance as described under “—Attending and Voting at the FLIR Special Meeting.” Brokers do not have discretionary voting power with respect to the approval of matters determined to be “non-routine” without specific instructions from the beneficial owner. Broker non-votes occur when a broker is not instructed by the beneficial owner of shares to vote on a particular proposal for which the broker does not have discretionary voting power. All of the proposals at the FLIR Special Meeting are considered non-routine matters. As a result, your broker cannot vote your shares without your specific instructions.

 

Abstentions

Abstentions, which occur when shares are voted “ABSTAIN with respect to one or more proposals, will have the same effect as votes “AGAINST” the FLIR Merger Proposal (FLIR Proposal No. 1).

 

  Abstentions will not be counted as votes cast on, and will have no effect on the outcome of, either the FLIR Advisory Executive Compensation Proposal (FLIR Proposal No. 2) or the FLIR Adjournment Proposal (FLIR Proposal No. 3).

 

Failure to Submit a Proxy or Vote Electronically at the Special Meeting; Broker Non-Votes

Failure to submit a proxy or vote electronically at the FLIR Special Meeting and broker non-votes, if any, will have the same effect as votes “AGAINST” the FLIR Merger Proposal (FLIR Proposal No. 1), but will have no effect on the outcome of either the FLIR Advisory Executive Compensation Proposal (FLIR Proposal No. 2) or the FLIR Adjournment Proposal (FLIR Proposal No. 3).

 

Failure to Provide Voting Instructions

Stockholders should specify their choice for each matter on the enclosed proxy card. If no specific instructions are given, proxies that are signed and returned will be voted (i) FOR the FLIR Merger Proposal, (ii) FOR the FLIR Advisory Executive Compensation Proposal and (iii) FOR the FLIR Adjournment Proposal.

 

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  If you grant a proxy, the persons named as proxy holders on the enclosed proxy card will vote your shares on any additional matters properly presented for a vote at the meeting as recommended by the FLIR Board or, if no recommendation is given, in their own discretion.

 

Revoking a Proxy

If you are a stockholder entitled to vote at the FLIR Special Meeting, you may revoke your proxy at any time before the vote is taken at the FLIR Special Meeting. To revoke your proxy, you must do one of the following:

 

   

enter a new vote over the Internet or by telephone by 11:59 p.m. Eastern Time on May 12, 2021;

 

   

sign and return another proxy card, which must be received by 11:59 p.m. Eastern Time on May 12, 2021;

 

   

provide written notice of the revocation to: FLIR Systems, Inc., Attention: Sonia Galindo, Senior Vice President, General Counsel, Secretary, and Chief Ethics & Compliance Officer, 1201 South Joyce Street, Arlington, Virginia 22202, which must be received by 11:59 p.m. Eastern Time on May 12, 2021; or

 

   

attend the FLIR Special Meeting and vote your shares electronically.

 

  If you are the beneficial owner of shares held in “street name” by a bank, broker or other nominee, you should follow the instructions of bank, broker or other nominee regarding the revocation of proxies. If you hold shares in FLIR’s 401(k) Plan, your voting instructions to the trustee of FLIR’s 401(k) Plan must be received by 11:59 p.m. Eastern Time on May 10, 2021.

 

Solicitation of Proxies

The solicitation of proxies from FLIR stockholders is made on behalf of the FLIR Board. Teledyne and FLIR will equally share the costs and expenses of printing and mailing this joint proxy statement/prospectus. FLIR has retained Okapi Partners to assist in the solicitation of proxies. Solicitations may be made personally or by mail, facsimile, telephone, messenger or over the Internet. In addition to Okapi Partners’ proxy solicitation fee of $15,000 plus charges for additional solicitation services upon request and reasonable out-of-pocket expenses, FLIR will reimburse brokerage firms and other custodians for their reasonable out-of-pocket expenses for forwarding the proxy materials to stockholders. Directors, officers and employees of FLIR may also solicit proxies in person, by telephone or by other means of communication. Directors, officers and employees of FLIR will not be paid any additional compensation for soliciting proxies.

 

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FLIR PROPOSAL NO. 1:

THE FLIR MERGER PROPOSAL

FLIR stockholders are being asked to approve the FLIR Merger Proposal. For a summary of and detailed information regarding the FLIR Merger Proposal, see the information about the Mergers and the Merger Agreement throughout this joint proxy statement/prospectus, including the information set forth in “The Mergers” beginning on page 64 of this joint proxy statement/prospectus and “The Merger Agreement” beginning on page 116 of this joint proxy statement/prospectus. A copy of the Merger Agreement is attached as Annex A to this joint proxy statement/prospectus.

Pursuant to the Merger Agreement, approval of the FLIR Merger Proposal is a condition to the consummation of the First Merger. If the Merger Proposal is not approved, the Mergers will not be completed.

The FLIR Board (i) determined that it was fair to, advisable and in the best interests of FLIR and its stockholders for FLIR to enter into the Merger Agreement and effect the Mergers and other transactions contemplated thereby, (ii) authorized, approved and adopted the execution, delivery and performance of the Merger Agreement and the transactions contemplated thereby (including the Mergers) on behalf of FLIR, and (iii) recommended to FLIR’s stockholders that they vote in favor of the FLIR Merger Proposal.

The approval of the FLIR Merger Proposal requires the affirmative vote of a majority of the outstanding shares of FLIR Common Stock entitled to vote as of the FLIR Record Date. Abstentions, failures to submit a proxy or vote electronically at the FLIR Special Meeting and broker non-votes will have the same effect as a vote AGAINST the FLIR Merger Proposal.

The FLIR Board recommends that FLIR stockholders vote “FOR” the FLIR Merger Proposal.

 

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FLIR PROPOSAL NO. 2:

THE FLIR ADVISORY EXECUTIVE COMPENSATION PROPOSAL

Pursuant to Section 14A of the Exchange Act, FLIR is providing its stockholders with the opportunity to approve a non-binding, advisory resolution on certain compensation that will or may be paid to its named executive officers in connection with the Mergers. This compensation is summarized in the table under “Interests of FLIR’s Directors and Executive Officers in the Mergers—Golden Parachute Compensation” on page 158 of this joint proxy statement/prospectus. That summary includes all compensation and benefits that will or may be paid or provided by FLIR or the combined company to FLIR’s named executive officers in connection with the Mergers, including as a result of a termination of employment in connection with the Mergers. FLIR, therefore, is asking its stockholders to approve the following resolution, on a non-binding, advisory basis:

“RESOLVED, that the compensation that will or may be paid or provided by FLIR or the combined company to FLIR’s named executive officers in connection with the Mergers and the agreements or understandings pursuant to which such compensation may be paid or become payable, in each case as disclosed pursuant to Item 402(t) of Regulation S-K in “Interests of FLIR’s Directors and Executive Officers in the Mergers—Golden Parachute Compensation” is hereby APPROVED.”

The FLIR Board encourages you to review carefully the information regarding compensation that will or may be paid or provided by FLIR to its named executive officers in connection with the Mergers disclosed in this joint proxy statement/prospectus. The FLIR Board recommends that FLIR stockholders approve, on a non-binding, advisory basis, the compensation that will or may be paid to FLIR’s named executive officers in connection with the Mergers.

The vote on the FLIR Advisory Compensation Proposal is a vote separate and apart from the vote on the FLIR Merger Proposal. Accordingly, you may vote to approve the FLIR Merger Proposal and vote not to approve the FLIR Advisory Executive Compensation Proposal and vice versa. Because the vote on the FLIR Advisory Executive Compensation Proposal is advisory only, it will not be binding on FLIR. Accordingly, if the Merger Agreement is adopted and the Mergers are completed, the compensation will be payable, subject only to the conditions applicable thereto, regardless of the outcome of the vote on the FLIR Advisory Executive Compensation Proposal.

Approval of the FLIR Advisory Executive Compensation Proposal requires the affirmative vote of a majority of the votes cast, electronically at the FLIR Special Meeting or by proxy. Abstentions, failures to submit a proxy or vote electronically at the FLIR Special Meeting and broker non-votes, if any, will not be counted as votes cast on, and will have no effect on the outcome of, the FLIR Advisory Executive Compensation Proposal.

The FLIR Board recommends that FLIR stockholders vote “FOR” the FLIR Advisory Executive Compensation Proposal.

 

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FLIR PROPOSAL NO. 3:

THE FLIR ADJOURNMENT PROPOSAL

FLIR is asking its stockholders to vote in favor of a proposal to approve one or more adjournments of the FLIR Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the FLIR Merger Proposal at the time of the FLIR Special Meeting. If FLIR stockholders approve the FLIR Adjournment Proposal, FLIR could adjourn the FLIR Special Meeting, and any adjourned session of the FLIR Special Meeting, and use the additional time to solicit additional proxies, including the solicitation of proxies from stockholders that have previously returned properly executed proxies voting against the approval of the FLIR Merger Proposal. Among other things, approval of the FLIR Adjournment Proposal could mean that, even if FLIR had received proxies representing a sufficient number of votes against the FLIR Merger Proposal, such that the FLIR Merger Proposal would be defeated, FLIR could adjourn the FLIR Special Meeting without holding a vote on the FLIR Merger Proposal and seek to convince the holders of those shares to change their votes to votes in favor of that proposal.

Approval of the FLIR Adjournment Proposal requires the affirmative vote of a majority of the votes cast, electronically at the FLIR Special Meeting or by proxy, on the FLIR Adjournment Proposal. In addition, even if a quorum does not exist, holders of a majority of the shares of FLIR Common Stock present at the FLIR Special Meeting, electronically at the FLIR Special Meeting or by proxy, may adjourn the meeting to another place, date or time. Abstentions, failures to submit a proxy or vote electronically at the FLIR Special Meeting and broker non-votes, if any, will not be counted as votes cast on, and will have no effect on the outcome of, the FLIR Adjournment Proposal.

The FLIR Board recommends that FLIR stockholders vote “FOR” the FLIR Adjournment Proposal.

 

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THE MERGERS

General

This joint proxy statement/prospectus is being provided to holders of Teledyne Common Stock and FLIR Common Stock in connection with the Merger Agreement attached as Annex A to this joint proxy statement/prospectus and the transactions contemplated under such agreement.

The Merger Agreement provides for, among other things, the merger of Merger Sub I with and into FLIR, with FLIR continuing as the surviving corporation and a wholly owned subsidiary of Teledyne, immediately followed by FLIR merging with and into Merger Sub II, with Merger Sub II continuing as the surviving company and a wholly owned subsidiary of Teledyne. You are urged to read the Merger Agreement in its entirety because it is the legal document that governs the Mergers. For additional information about the Mergers, see “The Merger Agreement—Structure and Completion of the Mergers” and “The Merger Agreement—Merger Consideration” beginning on pages 116 and 117, respectively, of this joint proxy statement/prospectus.

If the Mergers are completed, each outstanding share of FLIR Common Stock (with certain exceptions described in this joint proxy statement/prospectus) will be converted into the right to receive $28.00 in cash and 0.0718 shares of Teledyne Common Stock. Based on Teledyne’s 5-day volume weighted average price as of December 31, 2020, the last trading day prior to public announcement of the Mergers by Teledyne and FLIR on January 4, 2021, this implies a total purchase price of $56.00 per share of FLIR Common Stock. The transaction reflects a 40% premium for FLIR stockholders based on FLIR’s 30-day volume weighted average price as of December 31, 2020. The market price of Teledyne Common Stock when FLIR stockholders receive those shares after the Mergers are completed could be greater than, less than or the same as the market price of shares of Teledyne Common Stock on the date of this joint proxy statement/prospectus.

Background of the Mergers

The FLIR Board, in consultation with members of FLIR’s management team, periodically and in the ordinary course of business reviews and assesses FLIR’s performance, business, strategic direction, competitive position and prospects in light of the current business and economic environment and in consideration of its long-term business strategy to enhance value for its stockholders. From time to time, the FLIR Board, in consultation with members of FLIR’s management team and FLIR’s advisors, has evaluated and considered a variety of potential strategic options, including strategic acquisitions, divestitures and business combination transactions, in light of industry developments, economic and market conditions and challenges facing participants in the industry.

The Teledyne Board, in consultation with members of Teledyne’s management team, periodically and in the ordinary course of business evaluates and considers potential strategic acquisitions and business combination transactions in consideration of its long-term business strategy to better position Teledyne’s businesses in the industry and to enhance value for its stockholders. As part of this process, Teledyne’s management team periodically monitored FLIR as a potential acquisition target.

On May 14, 2020, a representative of Company A, a communications company, contacted Mr. James Cannon, President, Chief Executive Officer and Director of FLIR, by telephone to discuss their respective businesses. During this telephone call, the representative of Company A expressed Company A’s interest in learning more about FLIR and a possible collaboration or business combination between the two companies. The parties did not discuss the specific form or any terms of a possible collaboration or business combination. In light of the ongoing COVID-19 pandemic, Mr. Cannon declined to meet with the representative of Company A in person.

On May 17, 2020, the representative of Company A communicated with Mr. Cannon about meeting virtually to continue their discussion about a possible collaboration or business combination. The representative

 

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of Company A suggested a meeting with representatives of both companies in attendance to learn more about their respective businesses.

On May 18, 2020, Mr. Cannon, Ms. Sonia Galindo, Senior Vice President, General Counsel, Secretary and Chief Ethics and Compliance Officer of FLIR, and Ms. Carol Lowe, Executive Vice President and Chief Financial Officer of FLIR, met with representatives of Goldman Sachs, FLIR’s financial advisor, and Hogan Lovells to discuss the approach by Company A.

Later on May 18, 2020, Mr. Cannon communicated to the representative of Company A that FLIR was focused on running its business given the impact of the COVID-19 pandemic and would not be making the business team available to meet with representatives of Company A at this time.

On May 22, 2020, at a special meeting of the FLIR Board at which members of FLIR’s management team were present, Mr. Cannon summarized his contacts with the representative of Company A, including the conversation he had with the representative on May 14, 2020, during which the representative expressed Company A’s interest in learning more about FLIR and a possible collaboration or business combination with FLIR. Mr. Cannon conveyed to the FLIR Board his impression that Company A was unfamiliar with FLIR’s business and industry and was seeking to gather more information. After discussion, the FLIR Board concluded that it should consider and discuss Company A’s expression of interest further at the next meeting of the FLIR Board with FLIR’s advisors present.

On June 5, 2020, at a special meeting of the FLIR Board at which members of FLIR’s management team and representatives of Goldman Sachs and Hogan Lovells were present, representatives of Goldman Sachs discussed actions that the FLIR Board might take if Company A made a more formal approach, including an analysis of the strategic rationale of a possible collaboration or strategic transaction with Company A. Prior to the meeting, representatives of Hogan Lovells provided the FLIR Board with materials describing the directors’ fiduciary duties in connection with the FLIR Board’s evaluation of a potential strategic transaction. During the meeting, representatives of Goldman Sachs reviewed Company A’s business, stock performance, liquidity and investor base and a list of other potential parties that might be interested in pursuing a strategic transaction with FLIR. Representatives of Goldman Sachs and Hogan Lovells and members of FLIR’s management team responded to questions from the FLIR Board. The FLIR Board discussed a possible collaboration or strategic transaction with Company A, whether other potential parties would be interested in pursuing a strategic transaction with FLIR and whether proceeding with FLIR’s current business strategy offered the best opportunity to enhance stockholder value. Following such discussion, the FLIR Board concluded that FLIR’s current business strategy offered the best opportunity to enhance stockholder value and that Company A’s preliminary interest in a possible collaboration or business combination with FLIR was not sufficiently compelling to engage in substantive discussions or share confidential information with Company A.

On August 20, 2020, Mr. Michael T. Smith, the lead director of Teledyne and a director of FLIR, and Dr. Robert Mehrabian, Executive Chairman of Teledyne, discussed by telephone Teledyne’s proposed acquisition of Photonis International, an image intensifier and electron multiplier company based in France. During this conversation, Dr. Mehrabian advised Mr. Smith that Teledyne intended to commence discussions with Company Y, an instrumentation company. Dr. Mehrabian also advised Mr. Smith that if the proposed acquisition of Photonis International and potential transaction with Company Y are not completed, Teledyne may want to pursue an acquisition of FLIR. In response, Mr. Smith suggested that an acquisition of FLIR would likely require a per share price of at least $60.00 since FLIR’s stock briefly traded in excess of $59.00 per share in early 2020. Dr. Mehrabian and Mr. Smith did not discuss any other potential terms of any such transaction.

On August 21, 2020, Teledyne commenced discussions with Company Y regarding a potential strategic acquisition of Company Y by Teledyne.

On August 26, 2020 and September 1, 2020, the representative of Company A contacted Mr. Cannon about a potential meeting and communicated that he was willing to travel to meet with Mr. Cannon in person in

 

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Arlington, Virginia. Mr. Cannon noted that FLIR was focused on running its business given the impact of the COVID-19 pandemic, and the parties agreed to be in touch regarding scheduling a potential in-person meeting between the representative of Company A and Mr. Cannon.

On September 11, 2020, at a special meeting of the FLIR Board at which members of FLIR’s management team were present, Mr. Cannon updated the FLIR Board on his communications with the representative of Company A, including the representative’s offer to travel to Arlington, Virginia, for an in-person meeting. Mr. Cannon conveyed to the FLIR Board his impression that Company A’s interest in FLIR was still preliminary based on its unfamiliarity with FLIR’s business and industry. In the absence of any specific proposal from Company A and considering the need for FLIR’s management team to focus on running the business given the impact of the COVID-19 pandemic, the FLIR Board agreed that Mr. Cannon should not share confidential information or make other members of FLIR’s management team available to Company A.

On September 14, 2020, Dr. Mehrabian and Mr. Smith discussed the negotiations and status of the potential strategic acquisition of Company Y and Teledyne’s proposed acquisition of Photonis International and that the termination date contained in the Photonis transaction documents had passed. Dr. Mehrabian again raised a potential acquisition of FLIR as a strategic transaction in the event one of the transactions with Company Y and Photonis International did not proceed, and requested the cell phone number of Mr. Earl Lewis, Chairman of the FLIR Board. Mr. Smith informed Dr. Mehrabian that it was a good time for Dr. Mehrabian to reach out to Mr. Lewis because, in Mr. Smith’s opinion, the FLIR Board had become concerned about the FLIR CEO’s ability to manage costs and execute on FLIR’s strategy. Dr. Mehrabian and Mr. Smith did not discuss pricing or other potential terms of any such transaction.

On September 15, 2020, Mr. Smith provided Dr. Mehrabian with Mr. Lewis’s contact information, and Dr. Mehrabian informed Mr. Smith that he would wait a few days before reaching out to Mr. Lewis in order to assess whether Teledyne’s discussions with Company Y and its proposed acquisition of Photonis International would progress. Dr. Mehrabian and Mr. Smith did not discuss pricing or potential terms of a transaction with FLIR.

On September 28, 2020, Teledyne announced that discussions regarding its proposed acquisition of Photonis International had terminated.

Also on September 28, 2020, Dr. Mehrabian communicated to Mr. Smith that he intended to contact Mr. Lewis regarding a potential acquisition of FLIR. Dr. Mehrabian and Mr. Smith did not discuss pricing or potential terms of any such transaction.

Later on September 28, 2020, Dr. Mehrabian contacted Mr. Lewis to request a phone call and Mr. Lewis and Dr. Mehrabian subsequently spoke by telephone. The parties discussed having met years earlier as well as their respective businesses, management, recent stock price performances and the challenges of the COVID-19 pandemic. Dr. Mehrabian then expressed Teledyne’s potential interest in purchasing FLIR. The parties discussed the strategic fit of the two companies. The parties did not discuss pricing or potential terms of any such transaction, but Dr. Mehrabian proposed that any acquisition of FLIR by Teledyne would be funded by Teledyne through a combination of cash and stock. Mr. Lewis told Dr. Mehrabian that he would convey this expression of interest to the FLIR Board.

On September 29, 2020, Dr. Mehrabian updated Mr. Smith on his September 28, 2020 conversation with Mr. Lewis, reporting that he found the call to be unsatisfactory because Dr. Mehrabian did not think Mr. Lewis was interested in a transaction with Teledyne. Mr. Smith recommended involving the financial advisors for both companies. Dr. Mehrabian and Mr. Smith did not discuss pricing or other potential terms of any such transaction.

Also on September 29, 2020, at a special meeting of the FLIR Board at which members of FLIR’s management team and representatives of Goldman Sachs were present, Mr. Lewis informed the FLIR Board

 

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about his discussion with Dr. Mehrabian and Teledyne’s expressed interest in purchasing FLIR. Representatives of Goldman Sachs reviewed considerations for evaluating FLIR’s potential strategic alternatives and, along with Ms. Galindo, reviewed process protocols for the FLIR Board to consider. The FLIR Board engaged in a discussion regarding a potential strategic transaction between FLIR and Teledyne. Representatives of Goldman Sachs and members of FLIR’s management team responded to questions from the FLIR Board. The FLIR Board concluded that it was confident that FLIR’s current business strategy offered the best opportunity to enhance stockholder value and that any proposal from Teledyne would need to be compelling for FLIR to engage in substantive discussions or share confidential information with Teledyne. Mr. Lewis agreed to convey the conclusion of the FLIR Board to Dr. Mehrabian. Due to his position as a director on the Teledyne Board, Mr. Smith did not participate in this meeting.

On October 1, 2020, the representative of Company A contacted Mr. Cannon to schedule a meeting in Arlington, Virginia, to further discuss their respective businesses.

On October 2, 2020, Mr. Lewis spoke to Dr. Mehrabian by telephone and conveyed the conclusion from the FLIR Board meeting on September 29, 2020. Mr. Lewis explained that the FLIR Board was focused on executing FLIR’s current business strategy to enhance stockholder value and that the FLIR Board believed the current trading price of FLIR Common Stock was undervalued. Mr. Lewis further noted that the FLIR Board would require a compelling proposal from Teledyne to engage in discussions regarding a potential strategic transaction. Mr. Lewis declined to provide any guidance on what price the FLIR Board might find compelling. Dr. Mehrabian informed Mr. Lewis that he would reach out again if Teledyne decided to make an offer for FLIR.

Dr. Mehrabian and Mr. Smith talked on October 12, 2020 and October 19, 2020 about various matters in connection with the upcoming meeting of the Teledyne Board and the status of the other potential transactions, and on one of those calls, Dr. Mehrabian informed Mr. Smith that he did not think Mr. Lewis was interested in a transaction with Teledyne. Dr. Mehrabian and Mr. Smith did not discuss pricing or potential terms of any such transaction on either of those calls.

On October 19, 2020, Mr. Cannon and the representative of Company A met at FLIR corporate headquarters in Arlington, Virginia. The representative of Company A expressed Company A’s potential interest in a merger with, or acquisition of, FLIR but acknowledged that Company A was still in the process of learning about FLIR’s business and industry. The representative of Company A did not make a specific proposal, and the parties did not discuss potential terms of any transaction. Mr. Cannon told the representative of Company A that he would convey this expression of interest to the FLIR Board.

On October 20, 2020, the Teledyne Board held a meeting. Since there were no discussions regarding FLIR at this meeting, Mr. Smith attended this Teledyne Board meeting. At this meeting, Dr. Mehrabian informed the Teledyne Board that discussions with Photonis International had resumed and discussed the strategic benefits of, and the status of negotiations with, Company Y.

On October 21, 2020, Mr. Lewis reached out to Mr. Smith to explain that because of Teledyne’s previously expressed interest in FLIR and the fact that Teledyne’s expression of interest would likely be discussed at the upcoming meeting of the FLIR Board, Mr. Lewis recommended that Mr. Smith not attend the upcoming regularly scheduled October 28, 2020 FLIR Board meeting. In light of Teledyne’s pursuit of other transactions as well as Dr. Mehrabian’s stated belief that FLIR was not interested in a transaction, Mr. Smith informed Mr. Lewis of his belief that Teledyne would not be submitting a proposal to acquire FLIR. Based on this discussion, Mr. Lewis and Mr. Smith agreed that Mr. Smith could attend the upcoming FLIR Board meeting.

On October 27, 2020, the Teledyne Board was advised that discussions with Company Y had been terminated. Dr. Mehrabian telephoned Mr. Smith to discuss Teledyne’s termination of discussions with Company Y and the status of discussions to acquire Photonis International. Dr. Mehrabian and Mr. Smith did not discuss FLIR.

 

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On October 28-29, 2020, at a regularly scheduled meeting of the FLIR Board at which members of FLIR’s management team and representatives of Goldman Sachs were present, representatives of Goldman Sachs reviewed its preliminary financial analyses of FLIR and certain potential strategic alternatives for FLIR. Members of FLIR’s management team reviewed FLIR’s corporate strategy and potential growth opportunities and challenges, and the FLIR Board, in consultation with members of FLIR’s management team, discussed whether to pursue potential strategic alternatives for FLIR. Mr. Cannon advised the FLIR Board that, based on his conversations with the representative of Company A, he believed Company A was still gathering information about FLIR’s business and industry and as a result, Company A was not presently in a position to make a proposal to acquire FLIR. Mr. Lewis advised the FLIR Board, based on his conversation with Mr. Smith, that Teledyne would not be submitting a proposal to acquire FLIR. Since Mr. Smith had communicated his belief that Teledyne would not be submitting a proposal to acquire FLIR prior to this FLIR Board meeting, Mr. Smith participated in this FLIR Board meeting.

On November 9, 2020, Dr. Mehrabian asked Mr. Smith to contact Mr. Lewis to determine what it would take for FLIR to engage in negotiations about a potential transaction with Teledyne. Mr. Smith agreed to call Mr. Lewis. Dr. Mehrabian and Mr. Smith did not discuss pricing or potential terms of any such transaction.

On November 10, 2020, Mr. Smith reached out to Mr. Lewis and inquired what it would take for FLIR to engage in negotiations about a potential transaction with Teledyne. Mr. Lewis indicated that the FLIR Board would need a compelling offer but did not provide any guidance on what price or other terms the FLIR Board might consider compelling. Mr. Smith suggested getting the financial advisors involved in any discussion between the parties. Mr. Smith and Mr. Lewis did not discuss pricing or potential terms of any such transaction.

On November 11, 2020, Mr. Smith reported on his conversation with Mr. Lewis to Dr. Mehrabian. During the call, Mr. Smith and Dr. Mehrabian discussed FLIR’s emphasis on the defense business as compared to Teledyne including that FLIR served as a prime contractor on several programs of record and Teledyne typically served as a subcontractor. They also discussed FLIR’s new Arlington, Virginia, headquarters and the costs associated with FLIR’s new headquarters. Dr. Mehrabian and Mr. Smith did not discuss pricing or other potential terms of any transaction. Dr. Mehrabian and Mr. Smith agreed that Mr. Smith would need to be recused from any further discussions regarding a potential acquisition of FLIR.

On November 11, 2020, Dr. Mehrabian spoke with each of the Teledyne directors (other than Mr. Smith) regarding Teledyne making a non-binding proposal to acquire FLIR, and thereafter periodically updated directors (other than Mr. Smith) during the following weeks regarding the status of negotiations.

Also on November 11, 2020, Dr. Mehrabian emailed Mr. Smith that Teledyne had sent a letter containing a non-binding proposal to acquire all outstanding shares of FLIR to the FLIR Board. The email did not disclose the price or other details of the non-binding proposal. Neither Dr. Mehrabian nor any other member of Teledyne’s management team had any further discussions with Mr. Smith about the FLIR acquisition until after the transaction was publicly announced.

On November 13, 2020, the FLIR Board received a non-binding proposal dated November 11, 2020 from Teledyne to purchase all outstanding shares of FLIR Common Stock at $50.00 per share to be paid in cash and shares of Teledyne Common Stock. The non-binding proposal did not specify the allocation between cash and stock consideration. The $50.00 per share price proposed represented a premium of approximately 39% over FLIR’s closing share price on November 10, 2020.

On November 16, 2020, the representative of Company A contacted Mr. Cannon by telephone to follow up on their discussion during the October 19, 2020 meeting. The representative of Company A reiterated Company A’s interest in learning more about FLIR’s business and a possible collaboration or business combination with FLIR. The following day, on November 17, 2020, the representative of Company A delivered to Mr. Cannon a request for certain information about FLIR’s business.

 

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On November 18, 2020, at a special meeting of the FLIR Board at which members of FLIR’s management team and representatives of Goldman Sachs and Hogan Lovells were present, the FLIR Board discussed the proposal from Teledyne received on November 13, 2020. Representatives of Goldman Sachs reviewed its preliminary financial analyses of FLIR and Teledyne. Representatives of Goldman Sachs also reviewed other potential parties that might be interested in pursuing a strategic transaction with FLIR, including Company A. Also at this meeting, representatives of Hogan Lovells reviewed the directors’ fiduciary duties and other legal matters in connection with the FLIR Board’s evaluation of the Teledyne proposal and a potential sale transaction. The FLIR Board engaged in a discussion regarding the merits of a potential sale transaction, including pricing, process and timing of a potential transaction. The FLIR Board discussed the premium that the $50.00 per share price represented to FLIR’s recent trading prices, as well as the potential strategic alternatives for FLIR, including FLIR’s prospects as a standalone business. The FLIR Board discussed Teledyne’s ability to pay the proposed transaction price, the merits of stockholders receiving a mix of cash and shares of Teledyne Common Stock as transaction consideration, the merits of different allocations of cash and stock and the FLIR Board’s preference that at least 50% of the consideration be in cash. The FLIR Board also discussed the competitive landscape of FLIR, including opportunities and challenges faced by FLIR, as well as trends in the marketplace. Mr. Cannon updated the FLIR Board on his communications with the representative of Company A, including his impression that Company A was not in a position to submit a formal proposal to acquire FLIR due to Company A’s unfamiliarity with FLIR’s business and industry. Representatives of Goldman Sachs discussed with representatives of FLIR management and the FLIR Board the other potential parties that might be interested in pursuing a strategic transaction with FLIR, including Company A. Representatives of Goldman Sachs and Hogan Lovells and members of FLIR’s management team responded to questions from the FLIR Board. Following discussion, the FLIR Board concluded that there was a potential strategic fit between Teledyne and FLIR, but that Teledyne’s proposal did not adequately value FLIR. Mr. Smith was recused from this and all subsequent meetings of the FLIR Board through and including the meeting on January 3, 2021, during which the FLIR Board approved the Mergers and the other transactions contemplated by the Merger Agreement.

On November 19, 2020, Mr. Lewis spoke to Dr. Mehrabian by telephone. During this call, Mr. Lewis communicated to Dr. Mehrabian that the FLIR Board believed Teledyne’s $50.00 per share proposal did not adequately value FLIR but that there was a potential strategic fit between Teledyne and FLIR and the FLIR Board would consider a more compelling proposal. Dr. Mehrabian asked Mr. Lewis for contact information for FLIR’s financial advisors, which Mr. Lewis provided later that day.

On November 19 and 23, 2020, Mr. Cannon communicated with the representative of Company A confirming receipt of the request for certain information about FLIR’s business and proposing the parties connect after the Thanksgiving holiday.

On November 20, 2020, at the direction of the FLIR Board, representatives of Goldman Sachs spoke to Mr. Jason VanWees, Executive Vice President of Teledyne, by telephone regarding Teledyne’s proposal. The representatives of Goldman Sachs reiterated the FLIR Board’s view that Teledyne’s proposal of $50.00 per share did not adequately value FLIR and encouraged Teledyne to present a more compelling proposal if they were interested in acquiring FLIR. However, the representatives of Goldman Sachs indicated that they were neither providing information regarding, nor authorized to indicate, what price might be acceptable to the FLIR Board. Mr. VanWees suggested that in his experience, parties often solve purchase price gaps of 5% to 10% but noted parties rarely solve large price gaps of 20% or more, for example. Mr. VanWees then indicated if such a large gap existed between the Teledyne Board and the FLIR Board, it would be best to discontinue further discussions.

Due to his position as a director on both the Teledyne Board and the FLIR Board and given his attendance at the FLIR Board meeting held on October 28, 2020, Ms. Galindo requested that Mr. Smith confirm, and Mr. Smith confirmed in writing on November 21, 2020, to Ms. Galindo and Mr. Lewis that Mr. Smith had not, directly or indirectly, disclosed to any person affiliated with or acting on behalf of Teledyne any of the information, data or analysis that was reviewed by representatives of Goldman Sachs at the October 28, 2020 FLIR Board meeting or the views, positions or opinions expressed by FLIR officers or directors or representatives of Goldman Sachs at the October 28, 2020 FLIR Board meeting.

 

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The FLIR Board sent a letter to the Teledyne Board to formalize its rejection of their proposal, which was received by Teledyne on November 23, 2020.

On November 24, 2020, Mr. VanWees informed representatives of Goldman Sachs that Teledyne would consider next steps, but not likely until after the Thanksgiving holiday.

On November 30, 2020, representatives of Goldman Sachs spoke with Mr. VanWees by telephone. During this call, Mr. VanWees indicated that Teledyne was contemplating a revised proposal of $53.75 per share, 40% of which would be paid in cash and the remaining 60% of which would be paid in shares of Teledyne Common Stock. During this discussion, at the direction of the FLIR Board, representatives of Goldman Sachs encouraged Teledyne to make a revised proposal that contemplated a higher overall valuation of FLIR, with at least 50% of the consideration being in cash. Following this conversation, Mr. Lewis, Mr. Cannon, Ms. Galindo and Ms. Lowe met with representatives of Goldman Sachs and Hogan Lovells to discuss the conversation between Mr. VanWees and representatives of Goldman Sachs.

On November 30, 2020, the representative of Company A and Mr. Cannon scheduled a telephone conference for December 15, 2020.

On December 1, 2020, Mr. VanWees and representatives of Goldman Sachs had an additional call during which, at the direction of the FLIR Board, the representatives of Goldman Sachs encouraged Mr. VanWees to submit a revised proposal at the upper end of the range that Mr. VanWees indicated Teledyne might be willing to consider and reiterated that a 50/50 split of cash and stock would be preferred by the FLIR Board. Mr. VanWees indicated that he would provide this feedback to Dr. Mehrabian.

Following the call on December 1, 2020, Mr. VanWees communicated to Dr. Mehrabian and certain members of Teledyne senior management the potential terms of a revised proposal to FLIR and the feedback provided by the representatives of Goldman Sachs. Subsequent to that conversation, later on December 1, 2020, Mr. VanWees informed the representatives of Goldman Sachs that Teledyne would provide the FLIR Board with a formal, non-binding proposal confirming the price increase to $55.00 per share, 50% of which would be paid in cash and 50% of which would be paid in shares of Teledyne Common Stock, with such proposal to be subject to due diligence and Teledyne Board approval.

Later on December 1, 2020, the FLIR Board received a revised, non-binding proposal from Teledyne to purchase all outstanding shares of FLIR common stock at $55.00 per share, 50% of which would be paid in cash and 50% of which would be paid in shares of Teledyne Common Stock, which Teledyne indicated was its best offer based on the information available to it at that time. The per share price proposed represented a premium of approximately 44% over FLIR’s closing share price on November 30, 2020.

On December 2, 2020, Mr. VanWees and representatives of Goldman Sachs had a call to discuss potential next steps should the FLIR Board decide to move forward. At the direction of the FLIR Board, the representatives of Goldman Sachs advised Mr. VanWees that any key site visits would need to be scheduled for later in the process to preserve confidentiality and that the diligence process would be reciprocal given that FLIR’s stockholders would receive shares of Teledyne Common Stock in the proposed transaction. Discussion also occurred on Teledyne’s sources of financing for the proposed acquisition.

On December 4, 2020, FLIR and Goldman Sachs executed an engagement letter to formally engage Goldman Sachs as FLIR’s financial advisor in connection with the FLIR Board’s consideration of potential strategic transactions based on, among other things, FLIR’s familiarity with Goldman Sachs and Goldman Sachs’s reputation, deal experience and knowledge and familiarity with FLIR’s business.

Also on December 4, 2020, at a special meeting of the FLIR Board at which members of FLIR’s management team and representatives of Goldman Sachs and Hogan Lovells were present, representatives of

 

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Goldman Sachs summarized the discussions to date between FLIR and Teledyne. Representatives of Goldman Sachs also reviewed its preliminary financial analyses of FLIR and Teledyne and other potential parties that might be interested in pursuing a strategic transaction with FLIR, including Company A, and the likelihood, in the judgment of the representatives of Goldman Sachs, based on the circumstances of each potential party, that each of the other potential parties, including Company A, would be interested in making an acquisition proposal at a greater price than Teledyne’s $55.00 per share proposal. The FLIR Board discussed Teledyne’s proposal, including that the proposal was at a significant premium to the recent trading prices of FLIR Common Stock, and considered FLIR’s valuation and the risk and opportunities of FLIR continuing on a standalone basis. The FLIR Board also discussed the likelihood of other potential parties, including Company A, making an acquisition proposal at a higher price than Teledyne’s $55.00 per share proposal. The FLIR Board asked questions of FLIR management and representatives of Goldman Sachs regarding the other potential parties, including the potential interest and financial ability of each such potential party to complete a strategic transaction. As a result of this discussion and the anticipated disruption to the business by engaging with a significant number of other potential parties in a sale process, particularly in light of the increased risk of unauthorized or inadvertent disclosure of any such process, the FLIR Board identified a limited number of potential parties, including Company A, that might be contacted, on a highly confidential basis, as a pre-signing “market check.” Representatives of Goldman Sachs and Hogan Lovells and members of FLIR’s management team responded to questions from the FLIR Board. The FLIR Board concluded that it would consider and discuss the revised proposal from Teledyne further at a meeting of the FLIR Board the following week.

On December 8, 2020, at the direction of the FLIR Board, representatives of Goldman Sachs spoke with Mr. VanWees regarding the FLIR Board’s response to Teledyne’s revised proposal. Representatives of Goldman Sachs informed Mr. VanWees that the proposal was still under consideration and that the FLIR Board would be meeting again to further discuss the proposal.

On December 11, 2020, at a special meeting of the FLIR Board at which members of FLIR’s management team and representatives of Goldman Sachs and Hogan Lovells were present, representatives of Goldman Sachs provided an update of the discussions between representatives of Goldman Sachs and Teledyne. Representatives of Goldman Sachs reviewed potential responses to Teledyne and outlined next steps if the FLIR Board decided to move forward with the process, including due diligence to be conducted by both FLIR and Teledyne and potentially engaging in confidential discussions with other potential parties that might be interested in pursuing a strategic transaction with FLIR. The FLIR Board then discussed the negotiations with Teledyne that had occurred to date and the low likelihood of further price increases or extended price negotiations in light of Teledyne’s characterization of the $55.00 per share offer price as its best offer. Representatives of Goldman Sachs and Hogan Lovells and members of FLIR’s management team responded to questions from the FLIR Board. Representatives of Goldman Sachs also addressed questions from the FLIR Board regarding share price performance of Teledyne and of other acquirers before and after certain transactions. The FLIR Board instructed representatives of Goldman Sachs to advise Teledyne that the FLIR Board authorized FLIR to engage in substantive discussions with Teledyne and enter into a mutual confidentiality agreement so that both companies could share confidential information, including their respective business plans and forecasts. The FLIR Board instructed representatives of Goldman Sachs to advise Teledyne that FLIR was not agreeing to the $55.00 per share offer price and that the FLIR Board believed that Teledyne would be able to increase its offer price after reviewing FLIR’s business plan and forecast. The FLIR Board also instructed representatives of Goldman Sachs to advise Teledyne of the FLIR Board’s intent to instruct representatives of Goldman Sachs to contact, on a highly confidential basis, a limited number of other potential purchasers on a confidential basis as a pre-signing “market check.”

On December 11, 2020, representatives of Goldman Sachs had a telephone discussion with Mr. VanWees to inform him of the FLIR Board’s decision to engage in discussions with Teledyne regarding a potential transaction based on its revised proposal of $55.00 per share, with 50% to be paid in cash and 50% to be paid in shares of Teledyne Common Stock. Representatives of Goldman Sachs emphasized that the FLIR Board believed Teledyne would be able to increase its offer price after reviewing FLIR’s business plan and forecast. During this call, the Goldman Sachs representatives informed Mr. VanWees that FLIR had previously been contacted by a

 

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third party regarding a potential strategic transaction and that FLIR would continue discussions with that party and also conduct a pre-signing “market check” with a limited number of potential purchasers.

During this conversation and a follow-up communication, Mr. VanWees informed representatives of Goldman Sachs that Teledyne would not move forward with its proposal if FLIR contacted any other parties regarding a potential strategic transaction.

Between December 11, 2020 and 14, 2020, Dr. Mehrabian called individual Teledyne Board members (other than Mr. Smith) to update them on the status of the proposed transaction with FLIR and to communicate that further discussion of the proposed transaction would occur at the regularly scheduled meeting of the Teledyne Board on December 15, 2020.

On December 12, 2020, representatives of Goldman Sachs had multiple telephone discussions with Mr. Lewis regarding Teledyne’s response to FLIR’s plans to contact other parties regarding a potential strategic transaction. They agreed to discuss further with members of FLIR’s management team and representatives of Hogan Lovells.

On December 12, 2020, Mr. Lewis, the executive officers of FLIR and representatives of Goldman Sachs and Hogan Lovells met via video conference to discuss Teledyne’s response, including that Teledyne would not move forward with its proposal if FLIR contacted any other parties regarding a potential strategic transaction. The representatives of Goldman Sachs discussed the other potential parties that might be interested in pursuing a strategic transaction with FLIR. A discussion ensued regarding the likelihood of any of the other potential parties having both the financial ability and the interest in making an acquisition proposal at a price higher than Teledyne’s $55.00 per share proposal. Representatives of Hogan Lovells advised on the potential transaction agreement terms and the ability of an interested party to submit an acquisition proposal after signing. After further discussion, Mr. Lewis directed representatives of Goldman Sachs to continue discussions with Mr. VanWees with respect to a potential transaction but instructed representatives of Goldman Sachs to inform Mr. VanWees that the FLIR Board was not likely to be willing to forego a pre-signing market check unless Teledyne increased its offer price and agreed to other FLIR-favorable deal protection terms in the merger agreement, such as a “below market” termination fee that would be payable in the event that the FLIR Board determined to accept a superior proposal after signing the definitive transaction agreement.

Later on December 12, 2020, representatives of Goldman Sachs telephoned Mr. VanWees. The representatives of Goldman Sachs relayed that Mr. Lewis and members of FLIR’s management team had met and authorized continued discussions between FLIR and Teledyne. The representatives of Goldman Sachs also relayed that the FLIR Board was not likely to be willing to forgo a pre-signing market check unless Teledyne increased the $55.00 per share offer price and agreed to FLIR-favorable deal protection terms in any definitive transaction agreement, including a “below market” termination fee. In response, Mr. VanWees indicated Teledyne’s preference for market-based deal protection and termination fee terms. After this telephone conference, on December 12, 2020, FLIR through its representatives delivered to Teledyne a draft mutual confidentiality agreement pursuant to which the parties could share confidential information and representatives of Teledyne delivered to representatives of FLIR a priority information request list, which included questions regarding finance, tax, legal, regulatory and compliance matters.

On December 13, 2020, Teledyne contacted McGuireWoods LLP (“McGuireWoods”), Teledyne’s outside legal counsel, to review the mutual confidentiality agreement with respect to the evaluation of the proposed transaction.

On December 14, 2020, representatives of Goldman Sachs had a telephone conference with Mr. VanWees to discuss the due diligence process, including the priority information request list which Teledyne indicated was necessary for Teledyne to consider improving its proposal.

 

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From December 14, 2020 through December 18, 2020, representatives of FLIR and Teledyne held numerous telephone conferences to discuss the priority information request list from Teledyne regarding finance, tax, legal, regulatory and compliance matters.

On December 14, 2020, FLIR and Teledyne entered into a mutual confidentiality agreement with customary standstill provisions. Other than this mutual confidentiality agreement, FLIR did not enter into any confidentiality or standstill agreements with any potential counterparties to a potential strategic transaction with FLIR, including Company A, in connection with the consideration of strategic options described herein.

On December 15, 2020, Mr. Cannon spoke to the representative of Company A by telephone and discussed the information request that the representative of Company A previously delivered to Mr. Cannon. Mr. Cannon pointed out that much of the information requested about FLIR was publicly available and informed the representative that FLIR was unwilling to provide the detailed confidential information otherwise requested by Company A at this time. The representative of Company A acknowledged that much of the information requested was publicly available but explained that Company A was trying to gain a better understanding of FLIR’s business and reiterated his belief that there could be an opportunity for a possible collaboration or business combination between FLIR and Company A in the future. The representative of Company A indicated that he would keep in touch with Mr. Cannon.

Later on December 15, 2020, at a special meeting of the FLIR Board at which members of FLIR’s management team and representatives of Goldman Sachs and Hogan Lovells were present, the FLIR Board received an update on the discussions with Teledyne, including that Teledyne had stated that it would not move forward if FLIR contacted other potential parties. Representatives of Goldman Sachs and FLIR discussed the potential parties and the judgment of the representatives of Goldman Sachs, based on the circumstances of each potential party, regarding the likelihood that each such potential party would be interested in making an acquisition proposal at a greater price than Teledyne’s $55.00 per share proposal. Representatives of Hogan Lovells advised on the potential transaction agreement terms and the ability of an interested party to submit an acquisition proposal after signing. Members of FLIR’s management team provided an update on the priority request list received from Teledyne that Teledyne indicated was necessary to consider increasing its offer price, and the status of FLIR’s response to such request. Mr. Cannon also updated the FLIR Board on his most recent conversation with the representative of Company A and Mr. Cannon’s view, based on that conversation, that Company A had not done very much work to understand FLIR’s business and thus was not in a position to make a proposal to acquire FLIR. Representatives of Goldman Sachs and Hogan Lovells and members of FLIR’s management team responded to questions from the FLIR Board.

On December 15, 2020, at a regular meeting of the Teledyne Board, the Teledyne Board authorized Teledyne management to proceed with due diligence in connection with the proposed transaction with FLIR.

On December 17, 2020, Mr. Smith forwarded to Dr. Mehrabian an email that had attached to it a recent article on opportunities for FLIR sensors in the autonomous vehicle market in the event that Dr. Mehrabian had not seen the article. In doing so, Mr. Smith unwittingly also shared an email exchange among the FLIR Board members, which included commentary from Mr. Cannon on the U.S. Air Force program of record opportunity he believed FLIR would not win, and also noted that, as previously announced, FLIR had won the much larger U.S. Army version of such program.

Between December 17 and 18, 2020, representatives of FLIR, Goldman Sachs and Hogan Lovells had multiple discussions with representatives of Teledyne and McGuireWoods to address Teledyne’s priority information request.

On December 21, 2020, representatives of Teledyne delivered to representatives of FLIR an additional priority information request list, which included questions regarding tax, legal, regulatory, compliance and human resources matters.

 

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Also on December 21, 2020, Teledyne engaged McGuireWoods as its legal counsel on the proposed transaction. On December 22, 2020, Teledyne engaged Evercore to act as its financial advisor in connection with the proposed transaction.

On December 22, 2020, at a special meeting of the FLIR Board at which members of FLIR’s management team and representatives of Goldman Sachs and Hogan Lovells were present, the FLIR Board received an update on the discussions with Teledyne, and members of FLIR’s management team discussed the additional priority information request list received from Teledyne. The FLIR Board and members of FLIR’s management team discussed the likelihood of other potential parties making an acquisition proposal at a higher price than Teledyne’s $55.00 per share proposal. The FLIR Board discussed Mr. VanWees’s statement that Teledyne would withdraw its proposal if FLIR reached out to other potential parties that might be interested in pursuing a strategic transaction with FLIR. After this discussion, and in light of Mr. VanWees’s statement, the FLIR Board decided that the risk that Teledyne would withdraw its proposal if FLIR reached out to other potential parties outweighed the potential benefit of contacting other potential parties. The FLIR Board, members of FLIR’s management team and representatives of Goldman Sachs and Hogan Lovells discussed potential counterproposals which would not involve rejecting Teledyne’s $55.00 per share proposal, but could possibly either secure certain important non-price transaction terms for FLIR or result in a further increase in price. The FLIR Board directed representatives of Goldman Sachs to continue negotiations with Teledyne and propose an increased price of $57.00 per share in return for FLIR not contacting other potential strategic buyers.

Also on December 22, 2020, Stephen F. Blackwood, Senior Vice President and Treasurer of Teledyne, discussed potential bridge facility terms (and take out process) with representatives of Bank of America, N.A. Mr. Blackwood advised Bank of America, N.A. of the size of the proposed transaction, anticipated debt leverage, the credit rating process and the hypothetical financial profile of the combined entity.

On December 22, 2020, representatives of Goldman Sachs had a telephone discussion with Mr. VanWees to inform him of the FLIR Board’s counterproposal of $57.00 per share in return for FLIR not contacting other potential strategic buyers. Mr. VanWees informed the Goldman Sachs representatives that it was unlikely that Teledyne would accept the counterproposal, but that they could potentially offer $56.00 per share.

Later on December 22, 2020, representatives of Goldman Sachs had another telephone discussion with Mr. VanWees during which Mr. VanWees confirmed that Teledyne would increase its offer price to $56.00 per share and indicated that Teledyne did not have any room to move higher. The increased offer price of $56.00 per share represented a premium of approximately 35% over FLIR’s closing share price on December 22, 2020. The parties also discussed the status of Teledyne’s high priority diligence items and Mr. VanWees indicated that Teledyne’s counsel would begin drafting a definitive transaction agreement.

On December 23, 2020, Mr. VanWees conveyed to a representative of Goldman Sachs Teledyne’s concern that the approximate 6.6% increase in the trading price of FLIR Common Stock and the increase in trading volume that occurred on December 23, 2020 may have been due to a leak about a potential acquisition of FLIR and as a result Teledyne wanted to accelerate the timetable for due diligence and transaction negotiations in order to sign a definitive transaction agreement no later than January 4, 2021.

Also on December 23, 2020, FLIR provided Teledyne access to its virtual data room and delivered priority questions with respect to FLIR’s reverse due diligence of Teledyne.

On December 24, 2020, at a special meeting of the FLIR Board at which members of FLIR’s management team and representatives of Goldman Sachs and Hogan Lovells were present, representatives of Goldman Sachs provided the FLIR Board with an update on the discussions with Teledyne, including the increased offer price of $56.00 per share, Teledyne’s indication that it did not have any room to move higher on price and Teledyne’s proposed timing for signing a definitive transaction agreement. The FLIR Board then discussed the merits of and risks related to a transaction with Teledyne, including the benefits to stockholders of receiving $56.00 per share

 

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in cash and shares of Teledyne Common Stock. The FLIR Board also discussed the negotiations with Teledyne that had occurred to date and the FLIR Board’s view that Teledyne was unwilling to further increase its offer price. Representatives of Goldman Sachs reviewed its preliminary financial analyses of FLIR, Teledyne and Teledyne’s $56.00 per share proposal. Representatives of Goldman Sachs and Hogan Lovells and members of FLIR’s management team responded to questions from the FLIR Board. The FLIR Board directed management to proceed with a potential transaction with Teledyne without a pre-signing market check based on the increased offer price of $56.00 per share. The FLIR Board instructed representatives of Goldman Sachs and Hogan Lovells to negotiate for favorable terms in the definitive transaction agreement.

On December 24, 2020, representatives of each of FLIR and Teledyne had multiple telephone calls to discuss diligence matters, site visits and required regulatory filings.

On December 26, 2020, representatives of McGuireWoods sent an initial draft of the merger agreement to representatives of Hogan Lovells. The initial draft of the merger agreement provided for, among other things, a termination fee in an amount equal to 3.75% of the equity value of FLIR at the transaction price payable by FLIR in certain circumstances and no reverse termination fee.

From December 27, 2020 through January 3, 2021, representatives of FLIR and Teledyne held numerous telephone conferences to discuss due diligence matters regarding finance, accounting, legal, contracts, regulatory and compliance, operations and human resources.

On December 28, 2020, representatives of each of McGuireWoods, Teledyne, FLIR and Hogan Lovells held a telephone conference to discuss the initial draft merger agreement.

On December 29, 30, and 31, 2020 and January 1, 2, and 3, 2021, representatives of Hogan Lovells and McGuireWoods exchanged revised drafts of the merger agreement. During this time, the parties held numerous telephone conferences to discuss the drafts of the merger agreement and negotiate, among other things, the circumstances under which FLIR could entertain third-party acquisition offers prior to the closing of the Mergers, the circumstances under which either the FLIR Board or the Teledyne Board could change their recommendations to their respective shareholders that they approve the FLIR Merger Proposal (in the case of FLIR) or the Share Issuance Proposal (in the case of Teledyne), the amounts and triggers of the termination fee payable by FLIR and the reverse termination fee payable by Teledyne if the Merger Agreement is terminated under certain circumstances, FLIR’s ability to issue dividends prior to the closing of the Mergers, FLIR’s ability to issue new equity awards prior to the closing of the Mergers and the treatment of such equity awards in the Mergers, FLIR’s ability to pay retention awards to personnel of FLIR and its subsidiaries and the aggregate amount of such awards, the circumstances under which Teledyne could be required to make divestitures in order to obtain antitrust regulatory approval for the Mergers and the scope of the operating covenants that would be applicable to each of FLIR and Teledyne prior to the closing of the Mergers.

On December 30, 2020, representatives of Goldman Sachs and Hogan Lovells with members of FLIR’s management team present provided Mr. Lewis, Mr. Angus Macdonald, Chair of the Audit Committee of the FLIR Board, Mr. Steven E. Wynne, Chair of the Corporate Governance Committee of the FLIR Board and the Ethics & Compliance Committee of the FLIR Board, and Ms. Catherine Halligan, Chair of the Compensation Committee of the FLIR Board, with an update on the proposed transaction with Teledyne and status of negotiations on the draft merger agreement. Representatives of Goldman Sachs and Hogan Lovells responded to questions from the FLIR directors.

On January 1, 2021, representatives of Teledyne visited FLIR’s facilities in Täby, Sweden; Goleta, California; Billerica, Massachusetts; Chelmsford, Massachusetts; Wilsonville, Oregon; and Waterloo, Ontario, Canada.

On January 1, 2021, Goldman Sachs provided a letter to Ms. Galindo, as General Counsel and Secretary of FLIR, confirming that in the two years preceding the date of the letter, the Investment Banking Division of

 

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Goldman Sachs had not been engaged by Teledyne or its affiliates to provide financial advisory or underwriting services for which Goldman Sachs had recognized compensation and confirmed that nothing would limit Goldman Sachs’s ability to fulfill its potential responsibilities as financial advisor to FLIR in connection with a contemplated engagement of Goldman Sachs as financial advisor in connection with the proposed transaction.

On January 2, 2021, at a special meeting of the FLIR Board at which members of FLIR’s management team and representatives of Goldman Sachs and Hogan Lovells were present, the FLIR Board received an update on the status of the proposed transaction with Teledyne. Representatives of Goldman Sachs reviewed Goldman Sachs’s preliminary financial analyses of FLIR, Teledyne and Teledyne’s $56.00 per share proposal. Representatives of Hogan Lovells provided an update on the status of the draft merger agreement and provided a summary of the material terms of the draft merger agreement. Ms. Galindo, Ms. Lowe and Ms. Paula Cooney, Senior Vice President and Chief Human Resources Officer of FLIR, reported on the status of reverse due diligence efforts on Teledyne. Ms. Cooney also discussed the plan for the various merger-related communications. Representatives of Goldman Sachs and Hogan Lovells and members of FLIR’s management team responded to questions from the FLIR Board.

Also on January 2, 2021, at a special meeting of the Teledyne Board at which representatives of Evercore and McGuireWoods were present, Melanie Cibik, Senior Vice President, General Counsel, Chief Compliance Officer and Secretary of Teledyne, reviewed the fiduciary duties of the Teledyne directors in connection with the proposed transaction. Prior to the meeting, the Teledyne Board was provided with a summary of the material terms of the proposed transaction, including the form, terms, and provisions of the Commitment Letter. At the meeting, members of Teledyne’s management team reviewed the material terms of the proposed Merger Agreement. Representatives of Evercore reviewed Evercore’s preliminary financial analyses with respect to the Mergers. Also at this meeting, the Teledyne Board reviewed the disclosure statement previously provided by Evercore to the Teledyne Board on December 30, 2020, which disclosure statement indicated that there were no prior or current engagements or relationships between Evercore and FLIR during the prior two-year period in connection with the Mergers. The Teledyne Board formed the Teledyne Transaction Committee consisting of Kenneth C. Dahlberg and Roxanne S. Austin for the purpose of (i) receiving and reviewing the fairness opinion from Evercore on behalf of the Teledyne Board and (ii) reviewing and approving the final form of the Merger Agreement. The Teledyne Board then approved (x) the Commitment Letter and other financing documentation, (y) an amendment to the exclusive forum provision in the Teledyne Bylaws and (z) subject to the receipt and review of the Evercore opinion and the review and approval of the final Merger Agreement by the Teledyne Transaction Committee, the Merger Agreement, the Mergers, the Share Issuance and the other transactions contemplated by the Merger Agreement. For further information concerning the factors considered by the Teledyne Board in reaching its decision to approve the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement, including the Share Issuance, see “The Mergers—Teledyne’s Reasons for the Mergers; Recommendation of the Teledyne Board of Directors.”

On January 3, 2021, at a special meeting of the FLIR Board at which members of FLIR’s management team and representatives of Goldman Sachs and Hogan Lovells were present, representatives of Goldman Sachs reviewed Goldman Sachs’s financial analyses of FLIR, Teledyne and Teledyne’s $56.00 per share proposal. At the request of the FLIR Board, representatives of Goldman Sachs rendered its oral opinion, confirmed by delivery of a written opinion dated January 4, 2021, to the FLIR Board to the effect that, as of such date and based on and subject to various assumptions made, procedures followed, matters considered, and limitations and qualifications on the review undertaken in such opinion, the $56.00 per share to be received by the holders of FLIR common stock (other than Teledyne and its affiliates) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. The opinion of Goldman Sachs is more fully described in the section titled “The MergersOpinion of FLIR’s Financial Advisor.” Representatives of Hogan Lovells reviewed the terms of the proposed Merger Agreement, with a particular focus on the terms relating to FLIR’s representations and warranties, interim operating covenants, the “no-shop” and “fiduciary out” provisions, efforts to secure antitrust approvals, financing, closing conditions, termination fees and termination rights, and the negotiations over those terms, and reviewed the FLIR Board’s fiduciary duties. The FLIR Board discussed the terms of the

 

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proposed Merger Agreement, including that the FLIR Board could entertain certain unsolicited third-party proposals following the execution and announcement of the Merger Agreement and that a $250 million termination fee, representing approximately 3.4% of the equity value of FLIR, would be payable in certain circumstances, including in the event the FLIR Board were to pursue, subject to the terms and conditions of the Merger Agreement, an alternative proposal that was viewed by the FLIR Board as superior to the merger with Teledyne. Representatives of Goldman Sachs and Hogan Lovells and members of FLIR’s management team responded to questions from the FLIR Board. For further information concerning the factors considered by the FLIR Board in reaching its decision to approve the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement, see “The Mergers—FLIR’s Reasons for the Mergers; Recommendation of the FLIR Board of Directors.

Following consideration of the matters discussed during the course of the FLIR Board meeting, the FLIR Board (i) determined that it was fair to, advisable and in the best interests of FLIR and its stockholders for FLIR to enter into the Merger Agreement and effect the Mergers and other transactions contemplated thereby, (ii) authorized, approved and adopted the execution, delivery and performance of the Merger Agreement and the transactions contemplated thereby (including the Mergers) on behalf of FLIR, (iii) directed that the FLIR Merger Proposal, the FLIR Advisory Executive Compensation Proposal and the FLIR Adjournment Proposal be submitted to the FLIR stockholders for consideration, and (iv) recommended that FLIR stockholders vote in favor of such proposals.

At 12:01 a.m. Eastern Time on January 4, 2021, the Teledyne Transaction Committee held a meeting to receive and review the Evercore fairness opinion and approve and authorize the final terms of the Merger Agreement. At this meeting, Evercore reviewed Evercore’s financial analysis of the merger consideration and delivered its opinion to the Teledyne Board to the effect that, as of that date and based upon and subject to the assumptions, limitations, qualifications and matters described in Evercore’s opinion, the merger consideration of $28.00 in cash and 0.0718 shares of Teledyne Common Stock to be paid to the holders of FLIR Common Stock in the Mergers was fair, from a financial point of view, to Teledyne. The opinion of Evercore is more fully described in the section titled “The MergersOpinion of Teledyne’s Financial Advisor.” Following receipt of Evercore’s opinion, the Teledyne Transaction Committee reviewed changes in the key terms of the principal transaction agreements since the meeting of the Teledyne Board on January 2, 2021 and approved the Merger Agreement and the transactions contemplated thereby.

On January 4, 2021, FLIR and Teledyne executed the Merger Agreement. On the morning of January 4, 2021, prior to the commencement of trading on NASDAQ and the NYSE, FLIR and Teledyne issued a joint press release announcing their execution of the Merger Agreement.

Certain Relationships between Teledyne and FLIR

Teledyne, FLIR and their respective affiliates sometimes engage in transactions and enter into agreements with each other in the ordinary course of business. No such transaction occurring in Teledyne’s 2020 fiscal year, or the two prior fiscal years, had a value in excess of 1% of either party’s consolidated revenues for the calendar year in which such transaction occurred, nor did all such transactions in the aggregate have a cumulative value in excess of 1% of either party’s consolidated revenues, for the fiscal year in which such transactions occurred. Except as described in this joint proxy statement/prospectus, there are and have been no past, present or proposed material contracts, arrangements, understandings, relationships, negotiations or transactions during the current fiscal years of Teledyne and FLIR or the five immediately preceding fiscal years of Teledyne and FLIR, between Teledyne or its affiliates, on the one hand, and FLIR or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer for or other acquisition of securities, the election of directors, or the sale or other transfer of a material amount of assets.

 

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Teledyne’s Reasons for the Mergers; Recommendation of the Teledyne Board of Directors

At a meeting held on January 2, 2021, the Teledyne Board reviewed and considered the proposed Mergers with the assistance of Teledyne’s management, as well as with Teledyne’s legal and financial advisors. With one director, Michael T. Smith, who also serves on the FLIR Board, absenting himself from the meeting, the Teledyne Board approved the execution of the Merger Agreement, taking into consideration a number of substantive factors, both positive and negative, and potential benefits and detriments of the Mergers to Teledyne and its stockholders.

Accordingly, the Teledyne Board recommends that Teledyne stockholders vote “FOR” the Teledyne Share Issuance Proposal and “FOR” the Teledyne Adjournment Proposal.

In making its determination, the Teledyne Board focused on, among other things, the following material factors (not necessarily in order of relative importance):

 

   

the synergies in merging with a business that has the same core business model based on proprietary sensor technologies, but with different products and markets;

 

   

the opportunity to add new and complementary products with FLIR’s products based on different semiconductor technologies for imaging across different wavelengths than Teledyne products, and the opportunity to serve different customers and applications, with minimal overlapping technologies and markets;

 

   

the expectation of combining two businesses that both provide sensors, cameras and sensor systems to customers and both business portfolios being balanced among commercial and government markets and geographies, but with Teledyne primarily producing extremely high-performance infrared detectors used for astronomy and space-based imaging applications compared to FLIR’s products focused on helicopters to soldiers to firefighters throughout commercial tomography and automotive advanced driver systems;

 

   

Teledyne management’s track record in successfully integrating acquired companies;

 

   

the opportunity to add FLIR’s suite of imaging sensor products based on different semiconductor technologies for different wavelengths to Teledyne’s offerings;

 

   

Teledyne management’s identification of $40 million of potential synergies per year following the closing of the Mergers resulting from the combination of Teledyne’s and FLIR’s businesses, potentially growing to $80 million per year over time;

 

   

while future financial performance cannot be guaranteed, the belief that the acquisition of FLIR will be immediately accretive to earnings, excluding transaction costs and intangible asset amortization;

 

   

the terms applicable to the financing contemplated by the Commitment Letter, under which such lenders have committed to provide Teledyne with a $4.5 billion senior 364-day Bridge Facility;

 

   

the expectation of the Teledyne Board that antitrust and regulatory approvals required to consummate the Mergers would be obtained in the anticipated timeframe;

 

   

the scope and results of the due diligence investigation that Teledyne and its advisors conducted on FLIR;

 

   

the oral opinion of Evercore, financial advisor to Teledyne, to the Teledyne Board on January 4, 2021 (confirmed in writing later that day) to the effect that, as of that date and based upon and subject to the assumptions, limitations, qualifications and matters described in Evercore’s opinion, the merger consideration of $28.00 in cash and 0.0718 shares of Teledyne Common Stock to be paid to the holders of FLIR Common Stock in the Mergers was fair, from a financial point of view, to Teledyne, as more fully described below in the section “—Opinion of Teledyne’s Financial Advisor” beginning on page 83 of this joint proxy statement/prospectus supplement. The full text of the written opinion of Evercore to the Teledyne Board is attached as Annex B to this joint proxy statement/prospectus and is incorporated herein by reference;

 

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the terms of the Merger Agreement that require FLIR to pay a $250 million termination fee to Teledyne under certain circumstances in which the Merger Agreement is terminated, including circumstances relating to a change in the recommendation of the adoption of the Merger Agreement to FLIR’s stockholders by the FLIR Board;

 

   

the mix of cash and stock consideration, the fixed exchange ratio for the stock component of the merger consideration and the fact that because of the fixed exchange ratio (i.e., it will not be adjusted for fluctuations in the market price of Teledyne Common Stock or FLIR Common Stock), Teledyne would have certainty as to the number of shares of Teledyne Common Stock to be issued in connection with the First Merger, while noting that the value of Teledyne Common Stock to be paid to FLIR stockholders upon the closing of the First Merger could be significantly more or less than its implied value prior to the announcement of the execution of the Merger Agreement as a result of any difference in the market price of Teledyne Common Stock between the time of announcement and the closing of the First Merger;

 

   

the willingness of the Chairman of the FLIR Board to enter into a voting agreement in connection with the transactions contemplated by the Merger Agreement;

 

   

the course of negotiations between the parties in arriving at the amount and mix of consideration to be paid in the Mergers, taking note of the historic and current market prices of Teledyne Common Stock and FLIR Common Stock;

 

   

the general terms and conditions of the Merger Agreement, including the customary nature of the parties’ representations, warranties and covenants;

 

   

the likelihood that the Mergers would be consummated and the anticipated timing of closing based on, among other things, the scope of the conditions precedent to the closing generally, including regulatory approvals, the approval by FLIR’s stockholders of the FLIR Merger Proposal and the approval by Teledyne’s stockholders of the Teledyne Share Issuance Proposal; and

 

   

the likelihood that the Mergers, the Share Issuance and the other transactions contemplated by the Merger Agreement would be completed on a timely basis, including the likelihood that the Mergers would receive all necessary regulatory clearances and approvals without the imposition of unacceptable conditions.

The Teledyne Board also considered potential risks, uncertainties and other factors weighing negatively against the transactions contemplated by the Merger Agreement (including the Mergers and the Share Issuance), including, but not limited to, those set forth below:

 

   

the possibility that the Mergers may not be completed or that completion may be unduly delayed for reasons beyond the control of Teledyne and/or FLIR, including the potential length of the regulatory review process;

 

   

the challenges of combining the businesses of the two companies and the attendant risks of not achieving the expected strategic benefits and cost savings on the anticipated timeframe or at all;

 

   

the obligation of Teledyne to pay an approximately $250 million termination fee under certain circumstances where the Merger Agreement is terminated as a result of (i) the Teledyne Board changing its recommendation of the Share Issuance to Teledyne’s stockholders, (ii) Teledyne’s stockholders failing to approve the Teledyne Share Issuance Proposal and Teledyne subsequently entering into a competing acquisition agreement or closing on any such transaction within 12 months or (iii) the Merger Agreement being terminated as a result of Teledyne’s material breach and Teledyne subsequently entering into a competing acquisition agreement or closing on any such transaction within 12 months;

 

   

the inability to finalize and consummate the financing arrangements contemplated by the Commitment Letter;

 

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the Merger Agreement terms providing that Teledyne’s obligation to consummate the Mergers is not conditioned upon obtaining financing, which could subject Teledyne to unanticipated liabilities and expenses in the event those other transactions cannot be completed in the anticipated timeframe or at all;

 

   

the possibility that FLIR may seek specific performance in the event that Teledyne fails to consummate the Mergers pursuant to the terms of the Merger Agreement, even if Teledyne has not obtained financing for the Mergers;

 

   

the increased leverage and borrowing costs for Teledyne following the consummation of the Mergers and the other transactions contemplated by the Merger Agreement as a result of the incurrence of debt to finance such transactions;

 

   

the potential for diversion of management and employee attention from operational matters for an extended period of time;

 

   

the perception of investors and the potential impact on the trading price of shares of Teledyne Common Stock;

 

   

the terms and conditions of the Merger Agreement that restrict the conduct of Teledyne’s business pending the closing of the Mergers, which could delay or prevent Teledyne from undertaking business opportunities that may arise or from taking other actions with respect to its operations that the Teledyne Board and Teledyne’s management might believe were appropriate or desirable, and the potential length of time before conditions to consummation of the Mergers can be satisfied, during which time Teledyne would be subject to such restrictive terms and conditions;

 

   

the ability of FLIR to terminate the Merger Agreement in order to enter into an alternative acquisition agreement that the FLIR Board determines to be a superior proposal, subject to certain conditions (including Teledyne’s right to have an opportunity to revise the terms of the Merger Agreement), provided that FLIR concurrently pay a $250 million termination fee to Teledyne under certain circumstances as described in “The Merger Agreement—Termination of the Merger Agreement” beginning on page 137 of this joint proxy statement/prospectus and “The Merger Agreement—Termination Fees” beginning on page 139 of this joint proxy statement/prospectus;

 

   

the risk of litigation relating to the Mergers and the other transactions contemplated by the Merger Agreement;

 

   

the significant costs involved in connection with entering into the Merger Agreement and completing the Mergers and the Share Issuance, including costs to financial and other advisors, and the substantial time and effort of Teledyne’s management required to complete the transactions contemplated by the Merger Agreement, which may disrupt Teledyne’s business operations;

 

   

the rights of FLIR stockholders to demand appraisal of their shares of FLIR Common Stock in connection with the First Merger and the potential effect of such demands to increase the amount of cash to be paid by Teledyne;

 

   

the fact that the exchange ratio for the stock component of the merger consideration is fixed and will not fluctuate in the event that the market price of FLIR Common Stock decreases or the market price of Teledyne Common Stock increases between the date of the Merger Agreement and the consummation of the Mergers;

 

   

the fact that the Share Issuance will dilute the ownership of Teledyne’s existing stockholders; and

 

   

other risks of the type and nature described in “Risk Factors” beginning on page 32 and “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 44 of this joint proxy statement/prospectus.

The foregoing discussion of the information and factors considered by the Teledyne Board is not intended to be exhaustive, but rather is meant to include the material factors that the Teledyne Board considered. In view of

 

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the wide variety of factors considered in connection with its evaluation of the Mergers and the complexity of these matters, the Teledyne Board did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative or specific weight or values to any of these factors. Rather, the Teledyne Board based its approval on an overall review and on the totality of the information presented to and factors considered by it. In addition, in considering the factors described above, individual directors may have given different weights to different factors.

This explanation of Teledyne’s reasons for the Mergers and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors described under “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 44 of this joint proxy statement/prospectus.

Unaudited Prospective Financial Information Used by the Teledyne Board of Directors and Teledyne’s Financial Advisor

Teledyne generally does not make public internal projections as to future performance, revenue, earnings or other results, and is especially cautious of making projections for extended periods into the future due to, among other reasons, the unpredictability of the underlying assumptions and estimates.

However, in the course of evaluating the Mergers and negotiating the Merger Agreement, the management of Teledyne prepared certain non-public information, including certain unaudited internal financial forecasts with respect to Teledyne (the “Teledyne Projections”) and certain unaudited projections relating to synergies that it estimated would be achieved as a result of the Mergers for fiscal years 2021 through 2024 (the “Teledyne Management Synergy Projections”), which were provided to the Teledyne Board, Evercore, FLIR and FLIR’s financial advisor in connection with their evaluation of the proposed transactions. In addition, the management of FLIR prepared the FLIR Projections, as defined and more fully described in the section below titled “—Unaudited Prospective Financial Information Used by the FLIR Board of Directors and FLIR’s Financial Advisor”) on page 100 of this joint proxy statement/prospectus, which were provided to Teledyne and Evercore. Teledyne provided the FLIR Projections to the Teledyne Board and Evercore. The Teledyne Board reviewed and approved the use of each of the Teledyne Projections and the FLIR Projections by Evercore for purposes of its financial analyses and fairness opinion.

The Teledyne Projections were not prepared with a view toward public disclosure or toward complying with U.S. generally accepted accounting principles, nor were they prepared with a view toward compliance with the published guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants, for preparation and presentation of projections of prospective financial information. The Teledyne Projections were based on numerous variables and assumptions that are inherently uncertain and may be beyond management’s control. Further, given that the Teledyne Projections cover multiple years, by their nature, they become subject to greater uncertainty with each successive year beyond their preparation. The assumptions upon which the Teledyne Projections were based necessarily involve judgments with respect to, among other things, future economic, competitive and regulatory conditions and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among other things, the inherent uncertainty of the business and economic conditions affecting the industry in which Teledyne and FLIR operate, and the risks and uncertainties described in the section “Cautionary Statements Regarding Forward-Looking Statements” on page 44 of this joint proxy statement/prospectus all of which are difficult or impossible to predict accurately and many of which are beyond Teledyne’s control.

In the view of Teledyne management, the Teledyne Projections were prepared on a reasonable basis, reflect the best currently available estimates and judgments, and present, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of Teledyne and FLIR. However, this information is not fact and should not be relied upon as being necessarily indicative of future

 

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results. You are cautioned not to place undue reliance on the prospective financial information. Neither Teledyne’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.

Summary of Certain Financial Projections Prepared by Teledyne

The following table presents the Teledyne Projections consisting of unaudited prospective financial information for fiscal years 2020 through 2027 prepared in connection with the negotiation of the Merger Agreement. Teledyne’s fiscal year is determined based on a 52- or 53-week convention ending on the Sunday nearest to December 31. The Teledyne Projections were reviewed by the Teledyne Board and provided to Evercore and approved for Evercore’s use in connection with its financial analyses and fairness opinion. Teledyne also provided the Teledyne Projections to FLIR in connection with the negotiation of the Merger Agreement.

Teledyne’s management made various assumptions when preparing the Teledyne Projections. These assumptions included estimates of revenue growth and segment operating margins for the Digital Imaging, Instrumentation, Aerospace and Defense Electronics and Engineered Systems Segments. The Teledyne Projections for 2020 and 2021 were derived from Teledyne’s rolling forecast and draft annual business plan, respectively. The Teledyne Projections for 2022 through 2023 were derived from Teledyne’s draft strategic plan. For 2024 through 2027, the Teledyne Projections reflect managements’ forecast based on historical performance, as well as anticipated general business and economic conditions. The aggregate projected compounded annual growth rate (CAGR) from 2019 actual revenue through 2027 was 4.6% and comprised of the following: Digital Imaging, 6.9%; Instrumentation, 3.7%; Aerospace and Defense Electronics, 1.3%; and Engineered Systems, 5.6%. Growth in Digital Imaging was expected due, in part, to greater than average growth in MEMS products, space-based imaging sensors, and industrial and scientific vision systems. Revenue in Instrumentation was expected to result from greater than average growth in sales of environmental and electronic test & measurement instrumentation and lower growth in revenue from marine instrumentation. Slow growth in sales of Aerospace and Defense Electronics largely was expected to result from a contraction of sales in the commercial aerospace market in 2020 followed by a slow recovery. Revenue growth in Engineered Systems was expected to result from a strong performance in 2020, slower growth in 2021 given the end-of-life of one product family, followed by greater than average growth in marine, nuclear and other manufacturing programs. Total operating margin was expected to improve in all periods given increased sales, significant cost reductions and facility consolidations which occurred in 2020, as well as continued margin improvement efforts.

Certain of the measures included in the Teledyne Projections may be considered non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Teledyne may not be comparable to similarly titled amounts used by other companies. Financial measures provided to a financial advisor in connection with a business combination transaction are excluded from the definition of non-GAAP financial measures and therefore are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not provided to or relied upon by the Teledyne Board, the FLIR Board, Evercore or Goldman Sachs in connection with the Mergers. Accordingly, Teledyne has not provided a reconciliation of these financial measures. Additionally, Teledyne is unable to provide such a reconciliation for prospective periods because it is unable to reasonably predict certain items contained in the GAAP financial measures, including non-recurring and infrequent items that are not indicative of ongoing operations, due to the unknown effect, timing and potential significance of certain income statement items.

 

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     For the Fiscal Year Ending  
     2020E      2021E      2022E      2023E      2024E      2025E      2026E      2027E  
     (in millions)  

Revenue

   $ 3,077      $ 3,271      $ 3,498      $ 3,710      $ 3,934      $ 4,139      $ 4,335      $ 4,525  

Net Income

   $ 390      $ 435      $ 488      $ 552      $ 605      $ 660      $ 709      $ 759  

Adjusted EBITDA(1)

   $ 595      $ 679      $ 741      $ 818      $ 884      $ 951      $ 1,015      $ 1,076  

Free Cash Flow(2)

   $ 564      $ 652      $ 660      $ 714      $ 775      $ 837      $ 898      $ 955  

 

(1)

Adjusted EBITDA is defined as (i) net income (loss) plus income taxes, net interest expense and depreciation, depletion and amortization, less (ii) non-service retirement benefit income and other income / (expense), net. The GAAP measure most directly comparable to Adjusted EBITDA is net income (loss). Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to net income as a measure of operating performance or as an alternative to any other measure provided in accordance with GAAP.

(2)

Free cash flow is defined as Adjusted EBITDA (as defined above), plus change in net working capital, less capital expenditures, and reflects management adjustments excluding other income and expenses. Free cash flow is a non-GAAP financial measure and should not be considered as an alternative to net cash provided by operations as a measure of operating performance or as an alternative to any other measure provided in accordance with GAAP.

Teledyne Management Synergy Projections

In connection with the negotiations regarding the Merger Agreement, Teledyne management also prepared the Teledyne Management Synergy Projections.

In calculating estimated synergies, Teledyne’s management made assumptions with respect to the near-term elimination of public-company costs and commensurate overhead expenses. In future periods, synergies were expected to result from integration of business development, marketing, research and development and procurement expenses, as well as consolidation of a number of regional manufacturing and sales and service locations among Teledyne and FLIR. Furthermore, Teledyne expected to achieve savings upon integration of compliance programs.

The following table presents a summary of the Teledyne Management Synergy Projections consisting of cost savings as follows:

 

     For the Fiscal Year Ending  
     2021E(1)      2022E(2)      2023E(2)      2024E      Terminal
Years
 
     (in millions)  

Synergies

   $ 40      $ 55      $ 70      $ 80      $ 80  

 

(1)

Excludes $20 million of one-time costs to achieve synergies that take place immediately (day 1) as part of the integration. These costs include change in control cash payments, severance and lease terminations.

(2)

Excludes $5 million of costs to achieve synergies.

The Teledyne Management Synergy Projections were reviewed by the Teledyne Board and provided to Evercore, and approved for its use in connection with its financial analyses and fairness opinion, and to FLIR.

Opinion of Teledyne’s Financial Advisor

Teledyne retained Evercore to act as its financial advisor in connection with the Mergers. As part of this engagement, the Teledyne Board requested that Evercore evaluate the fairness, from a financial point of view, to Teledyne of the merger consideration to be paid to the holders of FLIR Common Stock in the Mergers. At a meeting of the Teledyne Transaction Committee held on January 4, 2021, Evercore rendered to the Teledyne Board its oral opinion, confirmed by delivery of a written opinion dated the same date, to the effect that, as of that date and based upon and subject to the assumptions, limitations, qualifications and matters described in Evercore’s opinion, the merger consideration of $28.00 in cash and 0.0718 shares of Teledyne Common Stock to be paid to the holders of FLIR Common Stock in the Mergers was fair, from a financial point of view, to Teledyne.

 

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The full text of the written opinion of Evercore, dated as of January 4, 2021, which sets forth, among other things, the procedures followed, assumptions made, matters considered and qualifications and limitations on the scope of review undertaken in rendering its opinion, is attached as Annex B to this joint proxy statement / prospectus and is incorporated herein by reference. You are encouraged to read this opinion carefully and in its entirety. Evercore’s opinion was addressed to, and provided for the information and benefit of, the Teledyne Board (in its capacity as such) in connection with its evaluation of the proposed Mergers. The opinion does not constitute a recommendation to the Teledyne Board or to any other persons in respect of the Mergers, including as to how any holder of shares of FLIR Common Stock or Teledyne Common Stock should vote or act in respect of the Mergers. Evercore’s opinion does not address the relative merits of the Mergers as compared to other business or financial strategies that might be available to Teledyne, nor does it address the underlying business decision of Teledyne to engage in the Mergers.

In connection with rendering its opinion, Evercore, among other things:

(i) reviewed certain publicly available business and financial information relating to FLIR and Teledyne that Evercore deemed to be relevant, including publicly available research analysts’ estimates;

(ii) reviewed the FLIR Projections furnished to Evercore by the management of FLIR and the Teledyne Projections prepared and furnished to Evercore by management of Teledyne, each as approved for Evercore’s use by Teledyne (together, for purposes of this section of the joint proxy statement/prospectus, the “Forecasts”), including the Teledyne Management Synergy Projections, as approved for Evercore’s use by Teledyne (for purposes of this section of the joint proxy statement/prospectus, the “Synergies”). The Teledyne Projections and the Teledyne Management Synergy Projections are each more fully described in the section above entitled “—Unaudited Prospective Financial Information Used by the Teledyne Board of Directors and Teledyne’s Financial Advisor,” and the FLIR Projections are more fully described in the section below entitled “—Unaudited Prospective Financial Information Used by the FLIR Board of Directors and FLIR’s Financial Advisor”;

(iii) discussed with managements of Teledyne and FLIR their assessment of the past and current operations of FLIR, the current financial condition and prospects of FLIR and the FLIR Projections and discussed with management of Teledyne their assessment of the past and current operations of Teledyne, the current financial condition and prospects of Teledyne, and the Forecasts, including the Synergies (including their views on the risks and uncertainties of achieving the Forecasts, including the Synergies);

(iv) reviewed the reported prices and the historical trading activity of the FLIR Common Stock and Teledyne Common Stock;

(v) compared the financial performance of FLIR and Teledyne and their respective stock market trading multiples with those of certain other publicly traded companies that Evercore deemed relevant;

(vi) compared the financial performance of FLIR and the valuation multiples relating to the Mergers with the financial terms, to the extent publicly available, of certain other transactions that Evercore deemed relevant;

(vii) reviewed the financial terms and conditions of a draft, dated as of January 3, 2021, of the Merger Agreement; and

(viii) performed such other analyses and examinations and considered such other factors that Evercore deemed appropriate.

For purposes of its analysis and opinion, Evercore assumed and relied upon the accuracy and completeness of the financial and other information publicly available, and all of the information supplied or otherwise made available to, discussed with, or reviewed by Evercore, without any independent verification of such information (and Evercore assumed no responsibility or liability for any independent verification of such information), and further relied upon the assurances of the managements of Teledyne and FLIR that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the Forecasts,

 

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including the Synergies, Evercore assumed with Teledyne’s consent that they had been reasonably prepared on bases reflecting the best then-currently available estimates and good faith judgments of the managements of Teledyne and FLIR as to the future financial performance of Teledyne and FLIR, as applicable, and the other matters covered thereby. Evercore relied, at the direction of Teledyne, on the assessments of the management of Teledyne as to Teledyne’s ability to achieve the Synergies and was advised by Teledyne, and assumed with Teledyne’s consent, that the Synergies would be realized in the amounts and at the times projected. Evercore expressed no view as to the Forecasts, including the Synergies, or the assumptions on which they were based.

For purposes of its analysis and opinion, Evercore assumed, in all respects material to its analysis, that the final executed Merger Agreement would not differ from the draft Merger Agreement reviewed by Evercore, that the representations and warranties of each party contained in the Merger Agreement were true and correct, that each party would perform all of the covenants and agreements required to be performed by it under the Merger Agreement and that all conditions to the consummation of the Mergers would be satisfied without waiver or modification thereof in any way material to Evercore’s opinion. Evercore further assumed, in all respects material to its analysis, that all governmental, regulatory or other consents, approvals or releases necessary for the consummation of the Mergers would be obtained without any delay, limitation, restriction or condition that would have an adverse effect on FLIR, Teledyne or the consummation of the Mergers or reduce the contemplated benefits to Teledyne of the Mergers.

Evercore did not conduct a physical inspection of the properties or facilities of FLIR or Teledyne and did not make and did not assume any responsibility for making any independent valuation or appraisal of the assets or liabilities (including any contingent, derivative or other off-balance sheet assets and liabilities) of FLIR or Teledyne, and Evercore was not furnished with any such valuations or appraisals, nor did Evercore evaluate the solvency or fair value of FLIR or Teledyne under any state or federal laws relating to bankruptcy, insolvency or similar matters. Evercore’s opinion was necessarily based upon information made available to Evercore as of the date of its opinion and financial, economic, market and other conditions as they existed and as could be evaluated on January 4, 2021. It is understood that developments subsequent to January 4, 2021 may affect Evercore’s opinion and that Evercore does not have any obligation to update, revise or reaffirm its opinion.

Evercore was not asked to pass upon, and has expressed no opinion with respect to, any matter other than the fairness to Teledyne, from a financial point of view, of the merger consideration. Evercore does not express any view on, and its opinion does not address, the fairness of the Mergers to, or any consideration received in connection therewith by, the holders of any class of securities, creditors or other constituencies of FLIR, nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of Teledyne or FLIR, or any class of such persons, whether relative to the merger consideration or otherwise. Evercore was not asked to, and Evercore did not express any view on, and its opinion does not address, any other term or aspect of the Merger Agreement or the Mergers, including, without limitation, the structure or form of the Mergers, or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the Merger Agreement. Evercore’s opinion did not address the relative merits of the Mergers as compared to other business or financial strategies that might be available to Teledyne, nor does it address the underlying business decision of Teledyne to engage in the Mergers. Evercore does not express any view on, and its opinion did not address, what the value of Teledyne Common Stock actually will be when issued or the prices at which FLIR Common Stock will trade at any time, including following announcement or consummation of the Mergers. Evercore’s opinion does not constitute a recommendation to the Teledyne Board or to any other persons in respect of the Mergers, including as to how any holder of shares of the FLIR Common Stock or Teledyne Common Stock should vote or act in respect of the Mergers. Evercore did not express any opinion as to the prices at which shares of FLIR Common Stock will trade at any time, as to the potential effects of volatility in the credit, financial and stock markets on FLIR or the Mergers or as to the impact of the Mergers on the solvency or viability of FLIR or the ability of FLIR to pay its obligations when they come due. Evercore is not a legal, regulatory, accounting or tax expert and assumed the accuracy and completeness of assessments by Teledyne and its advisors with respect to legal, regulatory, accounting and tax matters.

 

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Set forth below is a summary of the material financial analyses reviewed by Evercore with the Teledyne Board on January 2, 2021 and at a meeting of the Teledyne Transaction Committee held on January 4, 2021 in connection with rendering its opinion. The following summary, however, does not purport to be a complete description of the analyses performed by Evercore. The order of the analyses described and the results of these analyses do not represent relative importance or weight given to these analyses by Evercore. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data that existed on or before December 31, 2020 (the last full trading date prior to the rendering of Evercore’s opinion), and is not necessarily indicative of current market conditions.

For purposes of its analyses and reviews, Evercore considered general business, economic, market and financial conditions, industry sector performance, and other matters, as they existed and could be evaluated as of the date of its opinion, many of which are beyond the control of Teledyne or FLIR. The estimates contained in Evercore’s analyses and reviews, and the ranges of valuations resulting from any particular analysis or review, are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by Evercore’s analyses and reviews. In addition, analyses and reviews relating to the value of companies, businesses or securities do not purport to be appraisals or to reflect the prices at which companies, businesses or securities actually may be sold. Accordingly, the estimates used in, and the results derived from, Evercore’s analyses and reviews are inherently subject to substantial uncertainty.

Summary of Evercore’s Financial Analyses

The following summary of Evercore’s financial analyses includes information presented in tabular format. In order to fully understand the analyses, the tables should be read together with the full text of each summary. The tables are not intended to stand alone and alone do not constitute a complete description of Evercore’s financial analyses. Considering the tables below without considering the full narrative description of Evercore’s financial analyses, including the methodologies and assumptions underlying such analyses, could create a misleading or incomplete view of such analyses.

Analysis of FLIR

Discounted Cash Flow Analysis

Evercore performed a discounted cash flow analysis of FLIR to calculate the estimated present value of the standalone unlevered, after-tax free cash flow that FLIR was forecasted to generate during FLIR’s fiscal years 2021 through 2025 based on the Forecasts. Evercore calculated terminal values for FLIR (i) by applying terminal multiples of 14.0x to 18.0x, which range was selected based on Evercore’s professional judgment and experience, to FLIR’s estimated Adjusted EBITDA in fiscal year 2025 as set forth in the Forecasts (which we refer to as the “exit multiple method”) as well as (ii) by applying perpetuity growth rates of 3.0% to 4.0%, which range was selected based on Evercore’s professional judgment and experience, to a terminal year estimate of the standalone unlevered, after-tax free cash flow that FLIR was forecasted to generate based on the Forecasts (which we refer to as the “perpetuity growth method”).

The cash flows and terminal values in each case were then discounted to present value as of December 31, 2020 using discount rates ranging from 8.5% to 9.5%, which were based on an estimate of FLIR’s weighted average cost of capital, and the mid-year cash flow discounting convention, to derive ranges of implied enterprise values of FLIR.

Evercore calculated implied enterprise values for FLIR both including, as well as excluding, the net present value of the Synergies. Based on the derived ranges of implied enterprise values, FLIR’s estimated net debt (calculated as total debt and certain other debt-like items per FLIR’s management less cash and cash equivalents) as of December 31, 2020, and the number of fully diluted shares of FLIR Common Stock, in each case as provided by FLIR’s management, this analysis indicated the following ranges of implied equity values per share of FLIR Common Stock, compared to the implied merger consideration of $56.00 per share of FLIR Common Stock, which was calculated by adding the $28.00 in the cash component of the merger consideration to an implied value of $28.00 for the 0.0718 share of Teledyne Common Stock included in the merger consideration (based on Teledyne’s 5-day volume weighted average price as of December 31, 2020):

 

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Implied Equity Value
per Share of FLIR
Common Stock

Perpetuity Growth Rate Method, without Synergies

  

$48.51 – $69.90

Perpetuity Growth Rate Method, with Synergies

  

$53.51 – $74.90

Exit Multiple Method, without Synergies

  

$58.77 – $77.33

Exit Multiple Method, with Synergies

  

$63.77 – $82.33

Selected Public Company Trading Analysis

Evercore reviewed and compared certain financial information of FLIR to corresponding financial multiples and ratios for the following selected publicly traded companies in the defense technologies industry and industrial technologies industry (the “FLIR selected companies”).

 

Defense Technologies

  

Industrial Technologies

•  AeroVironment, Inc.

 

•  Elbit Systems Ltd.

 

•  HEICO Corporation

 

•  Kratos Defense & Security Solutions, Inc.

 

•  L3Harris Technologies, Inc.

 

•  Mercury Systems, Inc.

 

•  Raytheon Technologies Corporation

  

•  AMETEK, Inc.

 

•  Cognex Corporation

 

•  Fortive Corporation

 

•  Garmin Ltd.

 

•  Hexagon AB

 

•  Honeywell International Inc.

 

•  Keyence Corporation

 

•  National Instruments Corporation

 

•  Rockwell Automation, Inc.

 

•  Roper Technologies, Inc.

 

•  Teledyne Technologies Incorporated

 

•  Trimble Inc.

For each of the FLIR selected companies, Evercore calculated, among other things, (i) enterprise value (defined as equity market capitalization plus total debt, plus preferred equity and minority interest, less cash, cash equivalents and investments in affiliates) as a multiple of estimated 2021 Adjusted EBITDA (“2021E Adjusted EBITDA”) and (ii) closing share prices as of December 29, 2020 as a multiple of estimated 2021 earnings per share (“2021E EPS” and such ratio, “P/E Ratio”). Estimated financial data of the selected companies were based on publicly available research analysts’ estimates.

This analysis indicated the following:

Defense Technologies

 

     High      Low      Median  

Enterprise Value / 2021E Adjusted EBITDA

     37.3x        12.0x        21.3x 1 

2021E P/E Ratio2

     42.5x        14.3x        20.4x  

 

1   For purposes of its financial analyses, Evercore also calculated the median multiple excluding HEICO Corporation and Kratos Defense & Security Solutions, Inc., as Evercore viewed their respective multiples as outliers. The median multiple excluding those two companies was 13.1x.

2   HEICO Corporation and Kratos Defense & Security Solutions, Inc. were each excluded when calculating the “High,” “Low” and “Median” multiples because their respective multiples were viewed by Evercore as not meaningful as they were outliers.

 

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Industrial Technologies

 

     High      Low      Median  

Enterprise Value / 2021E Adjusted EBITDA1

     41.8x        18.1x        21.3x 2 

2021E P/E Ratio3

     33.9x        23.5x        28.0x  

 

1

Cognex Corporation was excluded when calculating the “High,” “Low” and “Median” multiples because its multiple was viewed by Evercore as not meaningful as it was an outlier.

2

For purposes of its financial analyses, Evercore also calculated the median multiple excluding Keyence Corporation, as Evercore viewed its multiple as an outlier. The median multiple excluding that company was 21.0x.

3

Cognex Corporation, Keyence Corporation and National Instruments Corporation were each excluded when calculating the “High,” “Low” and “Median” multiples because their respective multiples were viewed by Evercore as not meaningful as they were outliers.

Based on the multiples it derived for the FLIR selected companies and based on its professional judgment and experience, Evercore applied an enterprise value / 2021 Adjusted EBITDA multiple reference range of 13.0x to 21.0x to FLIR’s 2021E Adjusted EBITDA based on the Forecasts to derive a range of implied enterprise values of FLIR. Based on the derived range of implied enterprise values, FLIR’s estimated net debt (calculated as total debt and certain other debt-like items per FLIR’s management, less cash and cash equivalents) as of December 31, 2020, and the number of fully diluted shares of FLIR Common Stock, in each case as provided by FLIR’s management, this analysis indicated a range of implied equity values per share of FLIR Common Stock of $42.65 to $71.63, compared to the implied merger consideration of $56.00 per share of FLIR Common Stock, which was calculated by adding the $28.00 cash component of the merger consideration to an implied value of $28.00 for the 0.0718 share of Teledyne Common Stock included in the merger consideration (based on Teledyne’s 5-day volume weighted average price as of December 31, 2020).

Based on the multiples it derived for the FLIR selected companies and its professional judgment and experience, Evercore also applied a 2021E P/E Ratio multiple reference range of 20.5x to 28.0x to FLIR’s 2021E EPS based on the Forecasts. Based on this range of implied P/E Ratios, this analysis indicated a range of implied equity values per share of FLIR Common Stock of $50.91 to $69.53, compared to the implied merger consideration of $56.00 per share of FLIR Common Stock, which was calculated by adding the $28.00 cash component of the merger consideration to an implied value of $28.00 for the 0.0718 share of Teledyne Common Stock included in the merger consideration (based on Teledyne’s 5-day volume weighted average price as of December 31, 2020).

Although none of the FLIR selected companies is directly comparable to FLIR, Evercore selected these companies because they are publicly traded companies in the defense technologies industry and industrial technologies industry that Evercore, in its professional judgment and experience, considered generally relevant to FLIR for purposes of its financial analyses. In evaluating the FLIR selected companies, Evercore made judgments and assumptions with regard to general business, economic and market conditions affecting the selected companies and other matters, as well as differences in the FLIR selected companies’ financial, business and operating characteristics. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments regarding many factors that could affect the relative values of the FLIR selected companies and the multiples derived from the FLIR selected companies. Mathematical analysis, such as determining the median, is not in itself a meaningful method of using the data of the FLIR selected companies.

 

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Selected Transactions Analysis

Evercore reviewed, to the extent publicly available, financial information related to the following selected transactions involving publicly traded target companies in the industrial technologies industry announced since 2014 and in the defense technologies industry announced since 2011 (the “selected transactions”). The selected transactions reviewed by Evercore, and the month and year each was announced, are as set forth in the table below. For each selected transaction, Evercore calculated, among other things, the implied enterprise value (defined as the target company’s implied equity value based on the consideration paid in the applicable transaction plus total debt, plus preferred equity and minority interest, less cash, cash equivalents and investments in affiliates) as a multiple of last 12-month Adjusted EBITDA for the target company at the time of the announcement of the applicable transaction (“LTM Adjusted EBITDA”). Estimated financial data of the selected transactions were based on publicly available information at the time of announcement of the relevant transaction.

This analysis indicated the following:

 

Date Announced

   Target    Acquiror    Enterprise Value /
LTM Adjusted
EBITDA
 

Industrial Technologies

 

December 2020    MTS Systems Corporation    Amphenol Corporation      14.2x  
February 2020    ISRA Vision AG    Atlas Copco Germany Holding AG      21.0x  
September 2019    Gatan (Roper Technologies, Inc.)    AMETEK, Inc.      N.A.  
April 2019    JR Automation Technologies, LLC    Hitachi, Ltd.      ~14.3x * 
September 2018    Integrated Device Technology, Inc.    Renesas Electronics Corporation      24.1x  
October 2017    Excelitas Technologies Corp.    AEA Investors LP      ~12.1x * 
September 2017    Landauer, Inc.    Fortive Corporation      16.7x  
March 2017    Scott Technologies, Inc.    3M Company      12.9x  
January 2017    Ixia    Keysight Technologies, Inc.      15.9x  
May 2015    Pall Corporation    Danaher Corporation      20.9x  
October 2014    Danaher Corporation
Communications Business
   NetScout Systems, Inc.      13.8x  
June 2014    Measurement Specialties, Inc.    TE Connectivity Ltd.      19.5x  
June 2014    Hittite Microwave Corporation    Analog Devices, Inc.      16.8x  
Mean      16.8x  
Median      16.3x  
Defense Technologies

 

December 2020    Aerojet Rocketdyne Holdings, Inc.    Lockheed Martin Corporation      16.8x  
January 2020    Collins Aerospace’s Military
Global Positioning System
Business
   BAE Systems plc      14.1x  
December 2019    DYHC, Inc. (a/k/a Dynetics)    Leidos Holdings, Inc.      12.6x  
July 2019    Cobham plc    Advent International Corporation      13.3x  
July 2019    Souriau-Sunbank Connection
Technologies
   Eaton Corporation plc     
~12.0x

 
April 2019    LORD Corporation    Parker-Hannifin Corporation      15.1x  
October 2018    L3 Technologies, Inc.    Harris Corporation      14.5x  
October 2018    Esterline Technologies Corporation    TransDigm Group Incorporated      14.8x  
September 2017    Orbital ATK, Inc.    Northrop Grumman Corporation      14.3x  
February 2015    Exelis Inc.    Harris Corporation      9.3x  
May 2014    Aeroflex Holding Corp.    Cobham plc      11.1x  
April 2014    Orbital Sciences Corporation    Alliant Techsystems Inc.      ~9.8x * 
September 2011    Goodrich Corporation    United Technologies Corporation      12.9x  
Mean            13.1x  
Median            13.3x  

 

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*

For purposes of its financial analyses, Evercore estimated this multiple using enterprise value and/or LTM Adjusted EBITDA metrics sourced from research reports or company disclosure, as applicable.

Based on the multiples it derived from the selected transactions and based on its professional judgment and experience, Evercore selected a reference range of enterprise value to LTM Adjusted EBITDA multiples of 11.0x to 21.0x and applied this range of multiples to FLIR’s LTM Adjusted EBITDA as of December 31, 2020 based on the financial results for FLIR provided to Evercore by FLIR’s management. Based on this range of implied enterprise values, FLIR’s estimated net debt (calculated as total debt and certain other debt-like items per FLIR’s management, less cash and cash equivalents) as of December 31, 2020, and the number of fully diluted shares of FLIR Common Stock, in each case as provided by FLIR’s management, this analysis indicated a range of implied equity values per share of FLIR Common Stock of $33.66 to $68.30, compared to the implied merger consideration of $56.00 per share of FLIR Common Stock, which was calculated by adding the $28.00 cash component of the merger consideration to an implied value of $28.00 for the 0.0718 share of Teledyne Common Stock included in the merger consideration (based on Teledyne’s 5-day volume weighted average price as of December 31, 2020).

Although none of the target companies or businesses reviewed in the selected transactions analysis is directly comparable to FLIR and none of the selected transactions is directly comparable to the Mergers, Evercore selected these transactions because they involve companies or businesses that Evercore, in its professional judgment and experience, considered generally relevant to FLIR for purposes of its financial analyses. In evaluating the selected transactions, Evercore made judgments and assumptions with regard to general business, economic and market conditions and other factors existing at the time of the selected transactions, and other matters, as well as differences in financial, business and operating characteristics and other factors relevant to the target companies or businesses in the selected transactions. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments regarding many factors that could affect the relative values of the target companies or businesses in the selected transactions and the multiples derived from the selected transactions. Mathematical analysis, such as determining the mean or median, is not in itself a meaningful method of using the data of the selected transactions.

Other Factors

Evercore also noted certain other factors, which were not considered material to its financial analyses with respect to its opinion, but were referenced for informational purposes only, including, among other things, the following:

Premiums Paid Analysis

Using publicly available information, Evercore reviewed 13 transactions and announced bids for control of U.S. public targets, each with an aggregate transaction value between $3 billion and $10 billion, announced in the last ten years through December 29, 2020. Using publicly available information, Evercore calculated the premiums paid as the percentage by which the per share consideration paid or proposed to be paid in each such transaction exceeded the closing market prices per share of the target companies one day prior and four weeks prior to the announcement of each transaction.

This analysis indicated the following:

 

     1 Day
Prior
  4 Weeks
Prior

25th Percentile

   28%   26%

Median

   32%   32%

75th Percentile

   36%   40%

 

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Based on the results of this analysis and its professional judgment and experience, Evercore applied a premium range of 25.0% to 40.0% to the closing price per share of FLIR Common Stock of $43.04 as of December 29, 2020. This analysis indicated a range of implied equity values per share of FLIR Common Stock of $53.80 to $60.26.

Equity Research Analyst Price Targets

Evercore reviewed selected public market trading price targets for the shares of FLIR Common Stock prepared and published by equity research analysts that were publicly available as of December 29, 2020. These price targets reflect analysts’ estimates of the future public market trading price of the shares of FLIR Common Stock at the time the price target was published. As of December 29, 2020, the range of selected equity research analyst price targets per share of FLIR Common Stock was $35.00 to $54.00. Public market trading price targets published by equity research analysts do not necessarily reflect current market trading prices for the shares of FLIR Common Stock and these target prices and the analysts’ earnings estimates on which they were based are subject to risk and uncertainties, including factors affecting the financial performance of FLIR and future general industry and market conditions.

Last 52-Week Trading Range

Evercore reviewed historical trading prices of shares of FLIR Common Stock during the 52-week period ended December 29, 2020, noting that the low and high closing prices during such period ranged from $25.52 to $58.79 per share of FLIR Common Stock, respectively.

Analysis of Teledyne

Discounted Cash Flow Analysis

Evercore performed a discounted cash flow analysis of Teledyne to calculate the estimated present value of the standalone unlevered, after-tax free cash flow that Teledyne was forecasted to generate during Teledyne’s fiscal years 2021 through 2027 based on the Forecasts. Evercore calculated terminal values for Teledyne (i) using the exit multiple method by applying terminal multiples of 18.0x to 21.0x, which range was selected based on Evercore’s professional judgment and experience, to Teledyne’s estimated Adjusted EBITDA in fiscal year 2027 based on the Forecasts as well as (ii) using the perpetuity growth method by applying perpetuity growth rates of 3.25% to 4.25%, which range was selected based on Evercore’s professional judgment and experience, to a terminal year estimate of the standalone unlevered, after-tax free cash flow that Teledyne was forecasted to generate based on the Forecasts.

The cash flows and terminal values in each case were then discounted to present value as of December 31, 2020 using discount rates ranging from 8.25% to 9.25%, which were based on an estimate of Teledyne’s weighted average cost of capital, and the mid-year cash flow discounting convention, to derive ranges of implied enterprise values of Teledyne.

Based on the derived ranges of implied enterprise values, Teledyne’s estimated net debt (calculated as total debt and certain other debt-like items per Teledyne’s management less cash and cash equivalents) as of December 31, 2020, and the number of fully diluted shares of Teledyne Common Stock, in each case as provided by Teledyne’s management, this analysis indicated the following ranges of implied equity values per share of Teledyne Common Stock, compared to the share price of $384.91 per share of Teledyne Common Stock as of December 29, 2020:

 

     Implied Equity Value
per Share of Teledyne
Common Stock

Perpetuity Growth Rate Method

   $268.74 – $386.92

Exit Multiple Method

   $329.80 – $397.98

 

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Selected Public Company Trading Analysis

Evercore reviewed and compared certain financial information of Teledyne to corresponding financial multiples and ratios for the following selected publicly traded companies in the industrial technologies industry, including the industrial technologies compounders, and aerospace and defense industry (the “Teledyne selected companies”).

 

Industrial Technologies Compounders

  

Industrial Technologies (including the
Industrial Technologies Compounders)

  

Aerospace and Defense

•  AMETEK, Inc.

 

•  Fortive Corporation

 

•  IDEX Corporation

 

•  Roper Technologies, Inc.

  

•  AMETEK, Inc.

 

•  Amphenol Corporation

 

•  Cognex Corporation

 

•  Fortive Corporation

 

•  Hexagon AB

 

•  Honeywell International Inc.

 

•  IDEX Corporation

 

•  Keyence Corporation

 

•  Keysight Technologies, Inc.

 

•  National Instruments Corporation

 

•  Rockwell Automation, Inc.

 

•  Roper Technologies, Inc.

 

•  Spectris plc

 

•  TE Connectivity Ltd.

 

•  Teradyne, Inc.

 

•  Trimble Inc.

 

•  Viavi Solutions Inc.

  

•  FLIR Systems, Inc.

 

•  HEICO Corporation

 

•  Kratos Defense & Security Solutions, Inc.

 

•  L3Harris Technologies, Inc.

 

•  Mercury Systems, Inc.

 

•  Ultra Electronics Holdings plc

For each of the Teledyne selected companies, Evercore calculated, among other things, (i) enterprise value (defined as equity market capitalization plus total debt, plus preferred equity and minority interest, less cash, cash equivalents and investments in affiliates) as a multiple of 2021E Adjusted EBITDA and (ii) P/E Ratio based on closing share prices as of December 29, 2020 as a multiple of 2021E EPS. Estimated financial data of the selected companies were based on publicly available research analysts’ estimates.

This analysis indicated the following:

Industrial Technologies Compounders

 

     High      Low      Median  

Enterprise Value / 2021E Adjusted EBITDA

     23.5x        20.2x        21.8x  

2021E P/E Ratio

     34.4x        28.0x        28.4x  

 

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Industrial Technologies

 

     High      Low      Median      Median  
     (Excluding the Industrial
Technologies Compounders)
     (Including the
Industrial
Technologies
Compounders)
 

Enterprise Value / 2021E Adjusted EBITDA1

     41.8x        13.3x        19.2x        20.0x  

2021E P/E Ratio2

     31.8x        19.0x        25.3x        27.9x  

 

1

Cognex Corporation was excluded when calculating the “High,” “Low” and “Median” multiples because its multiple was viewed by Evercore as not meaningful as it was an outlier.

2

Cognex Corporation, Keyence Corporation and National Instruments Corporation were each excluded when calculating the “High,” “Low” and “Median” multiples because their respective multiples were viewed by Evercore as not meaningful as they were outliers.

Aerospace and Defense

 

     High      Low      Median  

Enterprise Value / 2021E Adjusted EBITDA

     37.3x        11.0x        17.4x  

2021E P/E Ratio*

     35.2x        14.3x        17.1x  

 

*

HEICO Corporation and Kratos Defense & Security Solutions, Inc. were each excluded when calculating the “High,” “Low” and “Median” multiples because their respective multiples were viewed by Evercore as not meaningful as they were outliers.

Based on the multiples it derived for the Teledyne selected companies and based on its professional judgment and experience, Evercore applied an enterprise value / 2021 Adjusted EBITDA multiple reference range of 20.0x to 23.5x to Teledyne’s 2021E Adjusted EBITDA based on the Forecasts to derive a range of implied enterprise values of Teledyne. Based on the derived range of implied enterprise values, Teledyne’s estimated net debt (calculated as total debt and certain other debt-like items per Teledyne’s management, less cash and cash equivalents) as of December 31, 2020, and the number of fully diluted shares of Teledyne Common Stock, in each case as provided by Teledyne’s management, this analysis indicated a range of implied equity values per share of Teledyne Common Stock of $352.35 to $414.69, compared to the share price of $384.91 per share of Teledyne Common Stock as of December 29, 2020.

Based on the multiples it derived for the Teledyne selected companies and its professional judgment and experience, Evercore also applied a 2021E P/E Ratio multiple reference range of 28.0x to 34.5x to Teledyne’s 2021E EPS based on the Forecasts. Based on this range of implied P/E Ratios, this analysis indicated a range of implied equity values per share of Teledyne Common Stock of $320.10 to $394.41, compared to the share price of $384.91 per share of Teledyne Common Stock as of December 29, 2020.

Although none of the Teledyne selected companies is directly comparable to Teledyne, Evercore selected these companies because they are publicly traded companies in the industrial technologies industry (including the industrial technologies compounders) and aerospace and defense industry that Evercore, in its professional judgment and experience, considered generally relevant to Teledyne for purposes of its financial analyses. In evaluating the Teledyne selected companies, Evercore made judgments and assumptions with regard to general business, economic and market conditions affecting the selected companies and other matters, as well as differences in the Teledyne selected companies’ financial, business and operating characteristics. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments regarding many factors that could affect the relative values of the Teledyne selected companies and the multiples derived from the Teledyne selected companies. Mathematical analysis, such as determining the median, is not in itself a meaningful method of using the data of the Teledyne selected companies.

 

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Other Factors

Evercore also noted certain other factors, which were not considered material to its financial analyses with respect to its opinion, but were referenced for informational purposes only, including, among other things, the following:

Equity Research Analyst Price Targets

Evercore reviewed selected public market trading price targets for the shares of Teledyne Common Stock prepared and published by equity research analysts that were publicly available as of December 29, 2020. These price targets reflect analysts’ estimates of the future public market trading price of the shares of Teledyne Common Stock at the time the price target was published. As of December 29, 2020, the range of selected equity research analyst price targets per share of Teledyne Common Stock was $365.00 to $400.00. Public market trading price targets published by equity research analysts do not necessarily reflect current market trading prices for the shares of Teledyne Common Stock and these target prices and the analysts’ earnings estimates on which they were based are subject to risk and uncertainties, including factors affecting the financial performance of Teledyne and future general industry and market conditions.

Last 52-Week Trading Range

Evercore reviewed historical trading prices of shares of Teledyne Common Stock during the 52-week period ended December 29, 2020, noting that the low and high closing prices during such period ranged from $201.18 to $395.36 per share of Teledyne Common Stock, respectively.

Implied Exchange Ratio Analysis

Evercore compared the results from each of the “Discounted Cash Flow Analysis” for each of FLIR (without taking into account Synergies) and Teledyne and the “Selected Public Company Trading Analysis” for each of FLIR and Teledyne, each described above, to determine a range of implied exchange ratios.

Specifically, for each analysis, Evercore compared (i) 50% (representing the percentage of stock consideration based on Teledyne’s 5-day volume weighted average price as of December 31, 2020) of the lowest implied equity value per share for FLIR derived from such analysis to the midpoint implied equity value per share for Teledyne derived from such analysis, and (ii) 50% of the highest implied equity value per share for FLIR derived from such analysis to the midpoint implied equity value per share for Teledyne derived from such analysis, to derive the range of exchange ratios implied by such analysis, and compared those ranges to the exchange ratio in the Mergers of 0.0718 shares of Teledyne Common Stock per share of FLIR Common Stock. This analysis assumed a valuation date of December 31, 2020 and the Synergies were not taken into account.

The analysis indicated a range of implied exchange ratios as follows:

 

     Implied
Exchange Ratio
 

Discounted Cash Flow Analysis

 

•  Perpetuity Growth Method, without Synergies

     0.074 – 0.107  

•  Exit Multiple Method, without Synergies

     0.081 – 0.106  

Selected Public Company Trading Analysis

 

•  Enterprise Value / 2021E Adjusted EBITDA Trading Multiple

     0.056 – 0.093  

•  2021E P/E Ratio Trading Multiple

     0.071 – 0.097  

Evercore also compared the results from each of the “Equity Research Analyst Price Targets” and “Last 52-Week Trading Range” factors for each of FLIR and Teledyne, each described above, to determine a range of implied exchange ratios, which were not considered material to its financial analyses with respect to its opinion, but were referenced for informational purposes only.

 

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Specifically, for each factor, Evercore compared (i) 50% of the lowest implied equity value per share for FLIR derived from such factor, to the midpoint implied equity value per share for Teledyne derived from such factor, and (ii) 50% of the highest implied equity value per share for FLIR derived from such factor to the midpoint implied equity value per share for Teledyne derived from such factor, to derive the range of exchange ratios implied by such factors.

The analysis indicated a range of implied exchange ratios as follows:

 

     Implied
Exchange Ratio

Equity Research Analyst Price Targets

   0.046 – 0.071

Last 52-Week Trading Range

   0.043 – 0.099

General

The foregoing summary of Evercore’s financial analyses does not purport to be a complete description of the analyses or data presented by Evercore to the Teledyne Board. In connection with the review of the Mergers by the Teledyne Board, Evercore performed a variety of financial and comparative analyses for purposes of rendering its opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary described above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Evercore’s opinion. In arriving at its fairness determination, Evercore considered the results of all the analyses and did not draw, in isolation, conclusions from or with regard to any one analysis or factor considered by it for purposes of its opinion. Rather, Evercore made its determination as to fairness on the basis of its professional judgment and experience after considering the results of all the analyses. In addition, Evercore may have given various analyses and factors more or less weight than other analyses and factors, and may have deemed various assumptions more or less probable than other assumptions. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above should not be taken to be the view of Evercore with respect to the actual value of the shares of Teledyne Common Stock or FLIR Common Stock. Rounding may result in total sums set forth in this section not equaling the total of the figures shown.

Evercore prepared these analyses for the purpose of providing an opinion to the Teledyne Board as to the fairness, from a financial point of view, to Teledyne of the merger consideration to be paid to the holders of FLIR Common Stock in the Mergers. These analyses do not purport to be appraisals or to necessarily reflect the prices at which the business or securities actually may be sold. Any estimates contained in these analyses are not necessarily indicative of actual future results, which may be significantly more or less favorable than those suggested by such estimates. Accordingly, estimates used in, and the results derived from, Evercore’s analyses are inherently subject to substantial uncertainty, and Evercore assumes no responsibility if future results are materially different from those forecasted in such estimates.

Evercore’s financial advisory services and its opinion were provided for the information and benefit of the Teledyne Board (in its capacity as such) in connection with its evaluation of the proposed Mergers. The issuance of Evercore’s opinion was approved by an Opinion Committee of Evercore.

Evercore did not recommend any specific amount of consideration to the Teledyne Board or Teledyne’s management or that any specific amount of consideration constituted the only appropriate consideration to be paid to the holders of FLIR Common Stock in the Mergers.

Pursuant to the terms of Evercore’s engagement letter with Teledyne, Teledyne has agreed to pay Evercore a fee for its services in the amount of $5 million, of which $1.5 million became payable upon delivery of Evercore’s opinion, and the balance of which will be payable contingent upon the consummation of the Mergers. Teledyne has also agreed to reimburse Evercore for its expenses and to indemnify Evercore against certain

 

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liabilities arising out of its engagement. During the two year period prior to the date of its opinion, Evercore and its affiliates have provided financial advisory services to Teledyne but have not received fees for the rendering of these services. In addition, during the two year period prior to the date of its opinion, Evercore and its affiliates have not been engaged to provide financial advisory or other services to FLIR and Evercore has not received any compensation from FLIR during such period. Evercore may provide financial advisory or other services to Teledyne and FLIR in the future, and in connection with any such services Evercore may receive compensation.

Evercore and its affiliates engage in a wide range of activities for its and their own accounts and the accounts of customers, including corporate finance, mergers and acquisitions, equity sales, trading and research, private equity, placement agent, asset management and related activities. In connection with these businesses or otherwise, Evercore and its affiliates and/or its or their respective employees, as well as investment funds in which any of them may have a financial interest, may at any time, directly or indirectly, hold long or short positions and may trade or otherwise effect transactions for their own accounts or the accounts of customers, in debt or equity securities, senior loans and/or derivative products or other financial instruments of or relating to Teledyne, FLIR, potential parties to the Mergers and/or any of their respective affiliates or persons that are competitors, customers or suppliers of Teledyne or FLIR.

Teledyne engaged Evercore to act as a financial advisor based on Evercore’s qualifications, experience and reputation. Evercore is an internationally recognized investment banking firm and regularly provides fairness opinions to its clients in connection with mergers and acquisitions, leveraged buyouts and valuations for corporate and other purposes.

FLIR’s Reasons for the Mergers; Recommendation of the FLIR Board of Directors

At a meeting held on January 3, 2021, with one director, Michael T. Smith, who also serves on the Teledyne Board, recused from the meeting, the FLIR Board (i) determined that it was fair to, advisable and in the best interests of FLIR and its stockholders for FLIR to enter into the Merger Agreement and effect the Mergers and other transactions contemplated thereby, (ii) authorized, approved and adopted the execution, delivery and performance of the Merger Agreement and the transactions contemplated thereby (including the Mergers) on behalf of FLIR, (iii) directed that the FLIR Merger Proposal, the FLIR Advisory Executive Compensation Proposal and the FLIR Adjournment Proposal be submitted to the FLIR stockholders for consideration, and (iv) recommended that FLIR stockholders vote in favor of such proposals.

Accordingly, the FLIR Board recommends that FLIR stockholders vote “FOR” the FLIR Merger Proposal, “FOR” the FLIR Advisory Executive Compensation Proposal and “FOR” the FLIR Adjournment Proposal.

As further described above in the section titled “—Background of the Mergers,” in evaluating the Mergers, the FLIR Board consulted with FLIR’s management, as well as with FLIR’s outside legal and financial advisors, and in reaching its decision, the FLIR Board considered various factors, including, among other things, the following (not necessarily in order of relative importance):

 

   

Historical Trading Prices. The historical share prices of FLIR and Teledyne, including the fact that the merger consideration, consisting of $28.00 in cash and 0.0718 shares of Teledyne Common Stock for each outstanding share of FLIR Common Stock, implies a total purchase price of $56.00 per share of FLIR Common Stock based on Teledyne’s 5-day volume weighted average price as of December 31, 2020, or $56.14 per share of FLIR Common Stock based on the closing price per share of Teledyne Common Stock on December 31, 2020, the last trading day prior to public announcement of the Mergers by Teledyne and FLIR on January 4, 2021.

 

   

Premium to Trading Price. The FLIR Board considered the fact that the merger consideration reflects:

 

     

a 28% premium for FLIR stockholders based on the closing price per share of FLIR Common Stock on December 31, 2020, the last trading day prior to public announcement of the Mergers by Teledyne and FLIR on January 4, 2021;

 

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a 49% premium for FLIR stockholders based on the 90-day volume weighted average price of shares of FLIR Common Stock as of December 31, 2020;

 

     

a 39% premium for FLIR stockholders based on the 30-day volume weighted average price of shares of FLIR Common Stock as of December 31, 2020;

 

     

a 25% premium for FLIR stockholders based on the median Wall Street research analyst price target of shares of FLIR Common Stock as of December 31, 2020;

 

     

an implied enterprise value of approximately 17.3 times FLIR’s earnings before interest, taxes, depreciation and amortization for the calendar year ending December 31, 2020 based on the FLIR Projections; and

 

     

an implied enterprise value of approximately 16.5 times FLIR’s earnings before interest, taxes, depreciation and amortization for the calendar year ending December 31, 2021 based on the FLIR Projections.

 

   

Liquidity and Opportunity for Future Appreciation. The merger consideration to be paid to FLIR’s stockholders will consist of a 50/50 mix of cash, which provides immediate liquidity and certainty of value to FLIR’s stockholders, and freely tradable Teledyne Common Stock. The stock component of the merger consideration will provide FLIR’s stockholders with the opportunity to participate in the future growth of Teledyne, including any potential appreciation that may be reflected in the value of the combined company, including any resulting synergies, and to attain liquidity should any FLIR stockholder choose not to retain its shares of Teledyne Common Stock.

 

   

Opinion of Financial Advisor. The FLIR Board considered the oral opinion of Goldman Sachs delivered to the FLIR Board on January 3, 2021, which was subsequently confirmed in writing that, as of the date of the written opinion and based upon and subject to the factors and assumptions set forth therein, the merger consideration to be paid to the holders (other than Teledyne and its affiliates) of shares of FLIR Common Stock, pursuant to the Merger Agreement, was fair from a financial point of view to such holders (as more fully described below in the section titled “—Opinion of FLIR’s Financial Advisor” and the copy of the written opinion attached as Annex C to this joint proxy statement/prospectus).

 

   

Extensive Negotiations. The merger consideration reflected extensive discussions and negotiations between the parties and their respective advisors, and the FLIR Board considered their belief, based on such discussions and negotiations and the advice of Goldman Sachs, that the merger consideration was the most that Teledyne was willing to pay and which represents the best proposal and economic value reasonably available to FLIR’s stockholders.

 

   

Alternatives. The FLIR Board considered whether there were other potential parties that might have an interest in, and be financially capable of, engaging in an alternative transaction with FLIR at a value higher than Teledyne’s proposal, the potential regulatory, commercial and financing issues or other risks and uncertainties that might arise in connection with pursuing such a transaction, the low likelihood, in Goldman Sachs’s judgment, that the other potential parties would make an acquisition proposal at a greater price than Teledyne’s proposal, and the belief, based on discussions and negotiations with Teledyne, that Teledyne would withdraw from consideration of a potential transaction with FLIR if FLIR were to pursue other potential parties.

 

   

FLIR’s Business and Prospects. The FLIR Board considered FLIR’s business, assets, financial condition, results of operations, current business strategy and prospects and the risks facing FLIR and its industry, including costs, risks and uncertainties associated with continuing to operate independently as a public company. The FLIR Board considered FLIR’s increased focus on its Defense Technologies Segment and the fact that prior to 2020 FLIR completed large, multi-year programs in such Segment that provided solid revenue contributions over the past several years and that newly-won franchise programs have required, and would continue to require, significant investments in research and

 

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development with little or no corresponding revenue until late 2021 and beyond. In particular, the Board considered the number of larger program awards that would be in development and were unlikely to generate revenue growth for FLIR for at least several years.

 

   

Teledyne’s Business and Prospects. The FLIR Board also considered information and discussions with FLIR’s management and advisors regarding Teledyne’s business, assets, financial condition, results of operations, current business strategy and prospects, including the size and scale of the combined company and the expected pro forma effect of the proposed Mergers on the combined company.

 

   

Terms of the Merger Agreement. The FLIR Board, with the assistance of FLIR’s outside legal advisors, reviewed the terms of the Merger Agreement, including:

 

     

the ability of the FLIR Board, subject to specified limitations, to respond to and engage in discussions or negotiations regarding unsolicited third-party acquisition proposals under certain circumstances, to change its recommendation as necessary to exercise its fiduciary duties, and, ultimately, to terminate the Merger Agreement in order to accept a superior proposal under certain circumstances, including payment of a $250 million termination fee to Teledyne;

 

     

the obligation of Teledyne to pay a $250 million termination fee to FLIR under certain circumstances in which the Merger Agreement is terminated, including circumstances relating to a change in the recommendation to Teledyne’s stockholders by the Teledyne Board; and

 

     

the belief that the terms and conditions of the Merger Agreement, taken as a whole, including the customary nature of the parties’ representations, warranties and covenants and the conditions to the parties’ respective obligations, are reasonable.

 

   

Dividends. The Merger Agreement permits FLIR to continue to pay to its stockholders up to two quarterly cash dividends, in each case in an amount not to exceed $0.17 per share of FLIR Common Stock.

 

   

Tax Treatment. The First Merger and the Second Merger, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

 

   

No Financing Condition. Teledyne’s obligations pursuant to the Merger Agreement are not subject to any financing condition or similar contingency based on Teledyne’s ability to obtain financing, and FLIR would be entitled to specific performance under the Merger Agreement, including the obligations of Teledyne to complete the Mergers, regardless of the availability or terms of Teledyne’s financing.

 

   

Committed Financing. The entry by Teledyne into the Commitment Letter setting forth the financing commitments and other arrangements regarding the financing available to Teledyne to complete the proposed Mergers.

 

   

Regulatory Matters. The FLIR Board considered the regulatory approvals or clearances that would be required as a condition to the Mergers and the prospects and anticipated timing of obtaining those approvals and clearances, including reasonable protection against the risk that the consummation of the Mergers is delayed or the Mergers cannot be completed, based on covenants contained in the Merger Agreement obligating each of the parties to use reasonable best efforts to cause the Mergers to be consummated and for Teledyne to avoid, eliminate or resolve impediments or objections under applicable antitrust laws, and the provision of the Merger Agreement allowing the outside date to be extended to September 30, 2021 if the Mergers have not been completed by the initial outside date of June 30, 2021, because the required regulatory approvals or clearances have not been obtained.

 

   

Appraisal Rights. Appraisal rights are available under Delaware law for any FLIR stockholders who oppose adoption of the Merger Agreement.

 

   

Likelihood of Completion. The FLIR Board also considered the likelihood that the Mergers would be consummated and the anticipated timing of closing based on, among other things, the scope of the conditions precedent to the closing and Teledyne’s reputation and financing commitments.

 

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The FLIR Board also considered potential risks, uncertainties and other countervailing factors with respect to the transactions contemplated by the Merger Agreement, including, among other things, the following (not necessarily in order of relative importance):

 

   

Failure or Delay to Complete the Mergers. The possibility that the Mergers may not be completed or that completion may be unduly delayed for reasons beyond the control of Teledyne and/or FLIR, including the potential length of the regulatory review processes and the risk that applicable governmental authorities may prohibit or enjoin the proposed Mergers or otherwise impose conditions on FLIR and/or Teledyne to obtain clearance for the Mergers, or due to the failure of other conditions to be satisfied or waived (see “The Merger Agreement—Conditions to Completion of the Mergers”).

 

   

Teledyne Common Stock as Consideration. The exchange ratio for the stock component of the merger consideration is fixed and therefore the value of such consideration will fluctuate depending on the performance of Teledyne Common Stock prior to the closing of the Mergers, and the Merger Agreement does not provide termination or walk-away rights to FLIR in the event of a decline in the price of Teledyne Common Stock.

 

   

Teledyne’s Financing. Teledyne’s ability to finalize and consummate the financing arrangements on the terms contemplated by the bridge financing commitment letter or otherwise.

 

   

Inability to Solicit Alternative Proposals; Termination Fee. The terms of the Merger Agreement include restrictions on the ability of FLIR to solicit proposals from third parties for alternative transactions or engage in discussions regarding such proposals, subject to certain exceptions (as more fully described in “The Merger Agreement—FLIR Acquisition Proposals”) and obligations of FLIR to pay a $250 million termination fee to Teledyne under certain circumstances where the Merger Agreement is terminated, including, among other things, circumstances relating to a change in the recommendation to FLIR’s stockholders by the FLIR Board or certain circumstances where FLIR enters into a competing acquisition proposal (as more fully described in “The Merger Agreement—Termination of the Merger Agreement” and “—Termination Fees”).

 

   

Teledyne Change in Recommendation. The terms of the Merger Agreement provide the Teledyne Board with the right to change its recommendation regarding the approval of the Share Issuance, in response to a Teledyne intervening event or an unsolicited Teledyne acquisition proposal, if the Teledyne Board has determined in good faith (after consultation with Teledyne’s outside counsel) that failure to make a Teledyne adverse recommendation change would be inconsistent with its fiduciary duties under applicable law, subject to certain circumstances (as more fully described in “The Merger Agreement—Special Meetings of FLIR Stockholders and Teledyne Stockholders; Recommendation of the FLIR Board; Recommendation of the Teledyne Board”).

 

   

Teledyne Failed Vote. The risk that if Teledyne stockholders fail to approve the Share Issuance, then Teledyne may terminate the Merger Agreement.

 

   

Impact of Announcement. The uncertainty about the effect of the proposed Mergers, regardless of whether the Mergers are completed, on FLIR’s employees, customers and other parties, may impair FLIR’s ability to attract, retain and motivate key personnel, could cause customers, suppliers, investors and others to seek to change existing relationships with FLIR, and could impact the trading prices of FLIR Common Stock and Teledyne Common Stock.

 

   

Incurred Costs. FLIR has incurred significant costs in connection with entering into the Merger Agreement and completing the Mergers, including costs of financial and other advisors and the substantial time and effort of FLIR’s management and employees required to complete the transactions contemplated by the Merger Agreement, which may divert attention from or otherwise disrupt FLIR’s business operations for an extended period of time.

 

   

Restrictions on Conduct of Business. The terms of the Merger Agreement restrict the conduct of FLIR’s business pending the closing of the Mergers, which could delay or prevent FLIR from

 

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undertaking business opportunities that may arise or from taking other actions with respect to its operations that the FLIR Board and FLIR’s management might believe are appropriate or desirable, and the potential length of time before conditions to consummation of the Mergers can be satisfied, during which time FLIR would be subject to such restrictive terms and conditions.

 

   

Litigation. The risk of litigation relating to the Mergers and the other transactions contemplated by the Merger Agreement.

 

   

Difficulties of Integration. The inherent difficulties in integrating the businesses, assets and workforces of two large companies, and the risk that anticipated strategic and other benefits to the combined company following completion of the proposed Mergers and any expected synergies will not be realized or will take longer to realize than expected.

 

   

Risk to Teledyne Common Stock. The risk that the price of Teledyne Common Stock could decline following the announcement of the transaction and the risk of significant selling pressure on the price of Teledyne Common Stock immediately following the closing of the Mergers if a significant number of FLIR stockholders seek to sell the Teledyne Common Stock they receive as merger consideration or otherwise.

 

   

Other Risks. Other risks of the type and nature described in “Risk Factors” beginning on page 32 and “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 44.

The foregoing discussion of the information and factors considered by the FLIR Board is not intended to be exhaustive, but rather is meant to include the material factors that the FLIR Board considered. In view of the wide variety of factors considered in connection with its evaluation of the Mergers and the complexity of these matters, the FLIR Board did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative or specific weight or values to any of these factors. Rather, the FLIR Board based its approval on an overall review and on the totality of the information presented to and factors considered by it. In addition, in considering the factors described above, individual directors may have given different weights to different factors.

This explanation of FLIR’s reasons for the Mergers and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors described under “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 44.

Unaudited Prospective Financial Information Used by the FLIR Board of Directors and FLIR’s Financial Advisor

FLIR does not normally publicly disclose long-term projections as to future revenue, earnings or other results due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. However, in connection with the evaluation of the Mergers, the management of FLIR provided the FLIR Board and representatives of its financial advisor, Goldman Sachs, with certain non-public, unaudited financial forecasts relating to FLIR.

FLIR Management Projections of FLIR Financial Information

In connection with the evaluation of the Mergers, FLIR’s management prepared certain non-public, unaudited financial forecasts regarding FLIR’s anticipated results of operations for fiscal years 2020 through 2025 (the “FLIR Projections”). FLIR’s management provided the FLIR Board and representatives of Goldman Sachs with the FLIR Projections and approved the use of the FLIR Projections by Goldman Sachs for purposes of its financial analyses and fairness opinion. FLIR also provided the FLIR Projections to Teledyne.

FLIR’s management made various assumptions when preparing the FLIR Projections. These assumptions included estimates of revenue growth for the Industrial Technologies Segment (“ITS”) and the Defense

 

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Technologies Segment (“DTS”). The FLIR Projections for fiscal years 2020 and 2021 were derived from FLIR’s annual operating plan process and reflect a forecast driven by a ramp-up in DTS unmanned franchise programs and a recovery of ITS industrial and commercial markets. The FLIR Projections for fiscal years 2022 through 2025 were based in part on historical performance, FLIR’s strategic plans and anticipated general business and economic conditions. Projections for ITS were developed using historical performance, FLIR’s strategic plans and market insights as guiding factors. The projected five-year revenue compounded annual growth rate (“CAGR”) for ITS is 4.3%. Projections for DTS were developed using its pipeline of franchise programs previously won and those in pursuit. The projected five-year revenue CAGR for DTS is 11.9%. When projections for the two operating segments, ITS and DTS, are combined, the projected five-year revenue CAGR for FLIR is 7.6%. FLIR’s management also made assumptions with respect to gross margin and operating expenses necessary to support future operations. ITS gross margin was developed at the industrial and commercial market levels based on expected market conditions, strategic initiatives, and other relevant factors. DTS gross margin was developed using its pipeline of franchise programs previously won and those in pursuit. The 2021 operating expense outlook was derived from FLIR’s annual operating plan process. The projected five-year operating expense is expected to grow at a 1.7% CAGR in ITS and at a 6.2% CAGR in DTS as additional investments in franchise programs will be necessary to deliver on won and pursing programs. Overall, FLIR operating expenses are expected to grow at a 3.2% CAGR over the five-year period.

The following table presents a summary of the FLIR Projections and the unlevered free cash flows derived from the FLIR Projections and provided by FLIR management to, and approved by FLIR management for use by, Goldman Sachs for purposes of its financial analyses and fairness opinion:

 

     Fiscal Year  
     2020E      2021E      2022E      2023E      2024E      2025E  
     (in millions)  

Revenue

   $ 1,896      $ 1,974      $ 2,088      $ 2,250      $ 2,461      $ 2,731  

Net Income

   $ 311        330        347        389        474        570  

Adjusted EBITDA(1)

   $ 463      $ 484      $ 503      $ 560      $ 670      $ 794  

Unlevered Free Cash Flow(2)

   $ 177      $ 281      $ 296      $ 314      $ 356      $ 432  

Adjusted EPS(3)

   $ 2.35      $ 2.48      $ 2.62      $ 2.94      $ 3.57      $ 4.29  

 

(1)

“Adjusted EBITDA” is earnings before interest and taxes adjusted to exclude (i) separation, transaction and integration costs related to divestiture and acquisition initiatives, (ii) amortization expense associated with acquired intangible assets, (iii) restructuring expenses and related asset impairment charges, (iv) costs incurred in connection with certain legal and compliance matters that are not representative of ongoing operational costs, (v) loss on debt extinguishment, (vi) tax expenses and benefits related to discrete events or transactions that are not representative of estimated tax rate related to ongoing operations and (vii) depreciation. Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to net income as a measure of operating performance or as an alternative to any other measure provided in accordance with GAAP.

(2)

“Unlevered free cash flow” is Adjusted EBITDA less taxes, capital expenditures, costs associated with mergers and acquisitions, changes in net working capital and other cash items. These calculations of unlevered free cash flow were not made available to Teledyne or Evercore.

(3)

Adjusted EPS is GAAP net earnings adjusted to exclude (i) separation, transaction and integration costs related to divestiture and acquisition initiatives, (ii) amortization expense associated with acquired intangible assets, (iii) restructuring expenses and related asset impairment charges, (iv) costs incurred in connection with certain legal and compliance matters that are not representative of ongoing operational costs, (v) loss on debt extinguishment, and (vi) tax expenses and benefits related to discrete events or transactions that are not representative of estimated tax rate related to ongoing operations, divided by weighted average common shares outstanding on a fully-diluted basis. Adjusted EPS is a non-GAAP financial measure that should not be considered as an alternative to GAAP EPS.

 

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Teledyne Pro Forma Projections

Teledyne management prepared the Teledyne Projections, as defined and more fully described in the section above titled “—Unaudited Prospective Financial Information Used by the Teledyne Board of Directors and Teledyne’s Financial Advisor”, which were provided to the FLIR Board. Teledyne management also prepared the Teledyne Management Synergy Projections, as defined and more fully described in the section above titled “—Unaudited Prospective Financial Information Used by the Teledyne Board of Directors and Teledyne’s Financial Advisor”, which were provided to the FLIR Board.

In connection with the evaluation of the Mergers, certain non-public, unaudited financial forecasts for Teledyne pro forma for the consummation of the Mergers for fiscal years 2021 through 2025 (the “Teledyne Pro Forma Projections”) were prepared on the basis of the FLIR Projections and the Teledyne Projections. The Teledyne Pro Forma Projections give effect to the Teledyne Management Synergy Projections. The Teledyne Pro Forma Projections were prepared on a basis different than the pro forma financial information included in the section titled “—Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 160 in this joint proxy statement/prospectus.

The Teledyne Pro Forma Projections reflect numerous assumptions and estimates that FLIR’s management made in good faith in connection with the preparation of the underlying FLIR Projections and that Teledyne management made in good faith in connection with the preparation of the underlying Teledyne Projections, as more fully described in each case above. The Teledyne Pro Forma Projections also reflect an assumption that approximately $160 million of estimated annual intangible amortization expense could result from the transaction and include expected new interest expense associated with the assumption of certain FLIR debt as well as new debt to fund the transaction.

The following table presents a summary of the Teledyne Pro Forma Projections:

 

     Fiscal Year  
     2021E      2022E      2023E      2024E      2025E  

Revenue

   $ 5,245      $ 5,586      $ 5,960      $ 6,395      $ 6,870  

Adjusted EBITDA(1)

   $ 1,207      $ 1,305      $ 1,455      $ 1,641      $ 1,832  

Unlevered Free Cash Flow(2)

   $ 841      $ 864      $ 932      $ 1,030      $ 1,155  

Adjusted EPS(3)

   $ 12.71      $ 15.26      $ 17.99      $ 21.31      $ 24.59  

 

(1)

“Adjusted EBITDA” is operating income adjusted to exclude (i) transaction and integration costs related to divestiture and acquisition initiatives, (ii) amortization expense associated with acquired intangible assets, (iii) restructuring expenses and asset impairment charges, (iv) costs incurred in connection with certain legal and compliance matters that are not representative of ongoing operational costs, (v) loss on debt extinguishment, (vi) tax expenses and benefits related to discrete events or transactions that are not representative of estimated tax rate related to ongoing operations and (vii) depreciation. Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to net income as a measure of operating performance or as an alternative to any other measure provided in accordance with GAAP.

(2)

“Unlevered free cash flow” is Adjusted EBITDA less taxes, capital expenditures, changes in net working capital and other cash items.

(3)

Adjusted EPS is GAAP net earnings adjusted to exclude (i) separation, transaction and integration costs related to divestiture and acquisition initiatives, (ii) amortization expense associated with acquired intangible assets, (iii) restructuring expenses and related asset impairment charges, (iv) costs incurred in connection with certain legal and compliance matters that are not representative of ongoing operational costs, (v) loss on debt extinguishment, and (vi) tax expenses and benefits related to discrete events or transactions that are not representative of estimated tax rate related to ongoing operations, divided by weighted average common shares outstanding on a fully-diluted basis. Adjusted EPS is a non-GAAP financial measure that should not be considered as an alternative to GAAP EPS.

 

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In the view of FLIR’s management, the Teledyne Projections and Teledyne Management Synergy Projections were prepared by Teledyne management on a reasonable basis and reflect the best then available estimates with respect to the expected future financial performance of Teledyne and FLIR and the other matters set forth therein. FLIR’s management provided representatives of Goldman Sachs with the Teledyne Projections and the Teledyne Management Synergy Projections and approved the use of the Teledyne Projections and Teledyne Management Synergy Projections by Goldman Sachs for purposes of its financial analyses and fairness opinion. The Teledyne Pro Forma Projections were not made available to Teledyne or to Evercore.

Important Information About the FLIR Unaudited Prospective Financial Information Used by the FLIR Board of Directors and FLIR’s Financial Advisor

The inclusion of the FLIR Projections and Teledyne Pro Forma Projections (together, the “FLIR Unaudited Prospective Financial Information”) in this joint proxy statement/prospectus should not be regarded as an indication that any of FLIR, Goldman Sachs, Evercore, their respective advisors or any of their respective affiliates, officers, directors, partners, advisors or other representatives considered, or now considers, those projections to be predictive of actual future results, and does not constitute an admission or representation by FLIR that this information is material.

While the FLIR Unaudited Prospective Financial Information summarized above was prepared in good faith based on the best estimates and judgments of FLIR’s management available at the time of preparation with respect to the expected future financial performance of FLIR, no assurances can be made regarding future events or that the assumptions made in preparing the FLIR Unaudited Prospective Financial Information will accurately reflect future conditions. In preparing the FLIR Unaudited Prospective Financial Information, FLIR’s management made assumptions that management considered reasonable as of the date of preparation regarding, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant uncertainties and contingencies, including, among others, risks and uncertainties described or incorporated by reference in the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” of this joint proxy statement/prospectus, all of which are difficult to predict and many of which are beyond the control of FLIR and will be beyond the control of the combined company. There can be no assurance that the underlying assumptions or projected results in the FLIR Unaudited Prospective Financial Information will be realized, and actual results will likely differ, and may differ materially, from those reflected in the FLIR Unaudited Prospective Financial Information, whether or not the Mergers are completed. As a result, the FLIR Unaudited Prospective Financial Information cannot be considered predictive of actual future operating results, and this information should not be relied on as such.

Since the FLIR Unaudited Prospective Financial Information covers multiple years, the information by its nature becomes less predictive with each successive year. FLIR stockholders are urged to review the SEC filings of FLIR for a description of risk factors with respect to the business of FLIR, as well as the risks and other factors described or incorporated by reference in the sections titled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” of this joint proxy statement/prospectus. Other than the FLIR Projections, which were provided to Teledyne and Evercore, the FLIR Unaudited Prospective Financial Information was prepared solely for internal use by FLIR and Goldman Sachs. The FLIR Unaudited Prospective Financial Information was not prepared with a view toward public disclosure, nor was the information prepared with a view toward compliance with published guidelines of the SEC regarding forward-looking statements and the use of non-GAAP measures, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, or GAAP.

The FLIR Unaudited Prospective Financial Information includes certain non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by FLIR may not be comparable to similarly titled amounts used by other companies. The footnotes to the tables above

 

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provide certain supplemental information with respect to the calculation of these non-GAAP financial measures. The SEC rules which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure do not apply to non-GAAP financial measures provided to a board of directors or a financial advisor in connection with a proposed business combination such as the Mergers if the disclosure is included in a document such as this joint proxy statement/prospectus. In addition, reconciliations of non-GAAP financial measures were not relied upon by Goldman Sachs or Evercore for purposes of their respective opinions or by the FLIR Board or the Teledyne Board in connection with their respective evaluations of the Mergers. Accordingly, FLIR has not provided a reconciliation of the financial measures included in the FLIR Unaudited Prospective Financial Information to the relevant GAAP financial measures.

Neither FLIR’s independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information. The report of KPMG LLP incorporated by reference into this joint proxy statement/prospectus relates to the previously issued consolidated financial statements of FLIR. It does not extend to the FLIR Unaudited Prospective Financial Information and should not be read to do so. The FLIR Unaudited Prospective Financial Information does not take into account any circumstances or events occurring after the date such information was prepared.

READERS OF THIS JOINT PROXY STATEMENT/PROSPECTUS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE FLIR UNAUDITED PROSPECTIVE FINANCIAL INFORMATION. FLIR DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE FLIR UNAUDITED PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE PREPARED OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE FLIR UNAUDITED PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE, EXCEPT AS MAY BE REQUIRED BY LAW.

Opinion of FLIR’s Financial Advisor

On January 3, 2021, at a meeting of the FLIR Board, Goldman Sachs rendered its oral opinion, subsequently confirmed in writing that, as of the date of the written opinion and based upon and subject to the factors and assumptions set forth therein, the merger consideration to be paid to the holders (other than Teledyne and its affiliates) of shares of FLIR Common Stock, pursuant to the Merger Agreement, was fair from a financial point of view to such holders.

The full text of the written opinion of Goldman Sachs, dated January 4, 2021, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex C. Goldman Sachs provided advisory services and its opinion for the information and assistance of the FLIR Board in connection with its consideration of the Mergers and other transactions contemplated by the Merger Agreement (which are together referred to in this section of the proxy statement/prospectus as the “transaction”). The Goldman Sachs opinion does not constitute a recommendation as to how any holder of shares of FLIR Common Stock should vote with respect to the transaction or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

   

the Merger Agreement;

 

   

the annual reports to stockholders and Annual Reports on Form 10-K of FLIR for the five years ended December 31, 2019;

 

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the annual reports to stockholders and Annual Reports on Form 10-K of Teledyne for the five fiscal years ended December 29, 2019;

 

   

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of FLIR and Teledyne;

 

   

certain other communications from FLIR and Teledyne to their respective stockholders;

 

   

certain publicly available research analyst reports for FLIR and Teledyne; and

 

   

certain internal financial analyses and forecasts for FLIR, certain financial analyses and forecasts for Teledyne, certain financial analyses and forecasts for Teledyne pro forma for the consummation of the transaction, and certain operating synergies projected to result from the transaction, in each case, prepared or provided to Goldman Sachs by the management of FLIR and approved for Goldman Sachs’ use by FLIR, including the FLIR Projections and the unlevered free cash flows derived from the FLIR Projections, the Teledyne Projections, the Teledyne Pro Forma Projections and the Teledyne Management Synergy Projections (each as defined in the section of this proxy statement/prospectus entitled “—Unaudited Prospective Financial Information Used by the FLIR Board and FLIR’s Financial Advisor”) (which are referred to collectively as the “Forecasts” in this section of the joint proxy statement/prospectus).

Goldman Sachs also held discussions with members of the senior managements of FLIR and Teledyne regarding their assessment of the strategic rationale for, and the potential benefits of, the transaction and the past and current business operations, financial condition and future prospects of Teledyne and with the members of senior management of FLIR regarding their assessment of the past and current business operations, financial condition and future prospects of FLIR; reviewed the reported price and trading activity for shares of FLIR Common Stock and shares of Teledyne Common Stock; compared certain financial and stock market information for FLIR and Teledyne with similar information for certain other companies the securities of which are publicly traded; reviewed the financial terms of certain recent business combinations in the industrial technology and defense technology industry and in other industries; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering its opinion, Goldman Sachs, with the consent of the FLIR Board, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by, it, without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the consent of the FLIR Board that the FLIR Projections were reasonably prepared by FLIR management on a basis reflecting the best currently available estimates and judgments of the management of FLIR and that the Forecasts (other than the FLIR Projections) were reasonably prepared and reflect the best currently available estimates and judgments of the management of FLIR. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off balance sheet assets and liabilities) of FLIR or Teledyne or any of their respective subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the transaction will be obtained without any adverse effect on FLIR or Teledyne or on the expected benefits of the transaction in any way meaningful to its analysis. Goldman Sachs also assumed that the transaction will be consummated on the terms set forth in the Merger Agreement, without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of FLIR to engage in the transaction, or the relative merits of the transaction as compared to any strategic alternatives that may be available to FLIR; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs was not requested to solicit, and did not solicit, interest from other parties with respect to an acquisition of, or other business combination with, FLIR or any other alternative transaction. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to the holders (other than Teledyne and its affiliates) of shares of FLIR Common Stock, as of the date of its opinion, of the merger consideration to be paid to such holders, pursuant to

 

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the Merger Agreement. Goldman Sachs does not express any view on, and its opinion does not address, any other term or aspect of the Merger Agreement or transaction or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the transaction, including, the fairness of the transaction to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors, or other constituencies of FLIR; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of FLIR, or class of such persons, in connection with the transaction, whether relative to the merger consideration to be paid to the holders (other than Teledyne and its affiliates) of shares of FLIR Common Stock, pursuant to the Merger Agreement or otherwise. Goldman Sachs did not express any opinion as to the prices at which shares of FLIR Common Stock or Teledyne Common Stock will trade at any time, as to the potential effects of volatility in the credit, financial and stock markets on FLIR or Teledyne or the transaction, or as to the impact of the transaction on the solvency or viability of FLIR or Teledyne or the ability of FLIR or Teledyne to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs’ advisory services and its opinion were provided for the information and assistance of the FLIR Board in connection with its consideration of the transaction and such opinion does not constitute a recommendation as to how any holder of shares of FLIR Common Stock should vote with respect to such transaction or any other matter. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

Summary of Financial Analyses

The following is a summary of the material financial analyses delivered by Goldman Sachs to the FLIR board in connection with rendering to the FLIR board the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before December 31, 2020, the last trading day before the public announcement of the transaction (which we refer to for the purposes of this section of the proxy statement/prospectus as the “last trading date”) and is not necessarily indicative of current market conditions.

Implied Premia and Multiple Analysis

Goldman Sachs calculated and compared certain implied premia and multiples using an implied value of the merger consideration per share of FLIR Common Stock as of the last trading date. For purposes of its analysis, Goldman Sachs calculated an implied value of the merger consideration per share of FLIR Common Stock of $56.14 as of the last trading date (which is referred to in this section of the proxy statement/prospectus as the “implied consideration”) by adding (i) the cash consideration of $28.00 to (ii) an implied value of the stock consideration of $28.14, calculated by multiplying the exchange ratio of 0.0718 by the closing price per share of Teledyne Common Stock on the last trading date of $391.98. Goldman Sachs then compared this implied consideration to (i) the closing price per share of FLIR Common Stock on the last trading date (which price is referred to in this section of the proxy statement/prospectus as the “unaffected closing price”), (ii) the volume weighted average price (which is referred to in this section of the proxy statement/prospectus as the “VWAP”) of shares of FLIR Common Stock during the 90 trading-day period ended on the last trading date (which is referred to in this section of the proxy statement/prospectus as the “90-day VWAP”), (iii) the VWAP of shares of FLIR Common Stock during the 30 trading day period ended on the last trading date (which is referred to in this section of the proxy statement/prospectus as the “30-day VWAP”) and (iv) the median Wall Street research analyst price target of shares of FLIR Common Stock as of the last trading date (which is referred to in this section of the proxy statement/prospectus as the “Median Analyst Price Target”).

 

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The results of these calculations are as follows:

 

FLIR Common Stock Reference Price

   Implied Premium
to Implied
Consideration
 

Unaffected Closing Price of $43.83

     28.1

90-day VWAP of $37.82

     48.5

30-day VWAP of $40.44

     38.8

Median Analyst Price Target of $45.00

     24.8

In addition, Goldman Sachs calculated an implied equity value for FLIR by multiplying (i) the implied consideration by (ii) the number of fully diluted outstanding shares of FLIR Common Stock as of the last trading date, as provided by the management of FLIR. Goldman Sachs then calculated an implied enterprise value for FLIR (which is referred to in this section of the proxy statement/prospectus as “EV”) by adding to such implied equity value, FLIR’s net debt and pension shortfall as of the last trading date, each as provided by the management of FLIR.

Using the foregoing, Goldman Sachs calculated the implied EV of FLIR, calculated as of the last trading date, as a multiple of FLIR’s earnings before interest, taxes, depreciation and amortization (which is referred to in this section of the proxy statement/prospectus as “EV / EBITDA”) for each of the calendar years ending December 31, 2020 and December 31, 2021 and based on the Forecasts.

Goldman Sachs also calculated the implied value of the merger consideration per share of FLIR Common Stock of $56.14 as a multiple of FLIR’s earnings per share (which is referred to in this section of the proxy statement/prospectus as “P/E”), for each of the calendar years ending December 31, 2020 and December 31, 2021 and based on the Forecasts.

The results of these calculations are as follows:

 

Metric

   Implied Multiple  

2020E EV / EBITDA

     17.3x  

2021E EV / EBITDA

     16.5x  

2020E P/E

     23.9x  

202E1 P/E

     22.6x  

Historical Trading Multiples Analysis

With respect to FLIR and Teledyne, Goldman Sachs calculated historical last twelve months (“LTM”) EV/EBITDA multiples based on financial and trading data as of December 31, 2020, Bloomberg and Institutional Brokers’ Estimate System (“IBES”) estimates. The results of these calculations are summarized as follows:

 

LTM EV / EBITDA Ratio:

   FLIR      Teledyne  

10 Year Average

     13.2x        13.3x  

5 Year Average

     15.4x        16.5x  

3 Year Average

     16.6x        18.7x  

1 Year Average

     14.3x        20.8x  

Current (as of December 31, 2020)

     14.0x        24.7x  

 

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Goldman Sachs also calculated historical next twelve months (“NTM”) P/E multiples for FLIR and Teledyne based on financial and trading data as of December 31, 2020, Bloomberg and IBES estimates. The results of these calculations are summarized as follows:

 

NTM P/E Ratio:

   FLIR      Teledyne  

10 Year Average

     18.4x        20.8x  

5 Year Average

     20.0x        25.3x  

3 Year Average

     20.6x        28.1x  

1 Year Average

     17.7x        30.9x  

Current (as of December 31, 2020)

     18.5x        34.8x  

Financial Analyses of FLIR

Illustrative Discounted Cash Flow Analysis

Using the Forecasts, Goldman Sachs performed an illustrative discounted cash flow analysis on FLIR. Using a mid-year discounting convention and discount rates ranging from 6.50% to 9.00%, reflecting estimates of FLIR’s weighted average cost of capital, Goldman Sachs discounted to present value as of December 31, 2020 (i) estimates of unlevered free cash flow for FLIR for the years 2021 to 2025 as reflected in the Forecasts and (ii) a range of illustrative terminal values for FLIR, which were calculated by applying an illustrative range of exit terminal year EV/EBITDA multiples ranging from 12.0x to 15.0x to estimated terminal year EBITDA for FLIR of $794 million (which analysis implied perpetuity growth rates ranging from 0.5% to 3.9%). Goldman Sachs derived such range of discount rates by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including the company’s target capital structure weightings, the cost of long-term debt, future applicable marginal cash tax rate and a beta for the company, as well as certain financial metrics for the United States financial markets generally. The illustrative terminal value EV/EBITDA multiple range for FLIR was derived by Goldman Sachs using its professional judgment and experience, taking into account, among other things, the historical LTM EV/EBITDA multiples for FLIR.

Goldman Sachs derived a range of illustrative enterprise values for FLIR by adding the range of present values it calculated for the unlevered free cash flow and for the illustrative terminal values, as described above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for FLIR the adjusted net debt of FLIR of $451 million, as of December 31, 2020, as provided by the management of FLIR, to derive a range of illustrative equity values for FLIR. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding FLIR Common Stock ranging from 134.2 million to 134.4 million, as provided by the management of FLIR, to derive a range of illustrative values per share of FLIR Common Stock, rounded to the nearest $1.00, of $53 to $72.

Illustrative Present Value of Future Share Price Analysis

Goldman Sachs performed an illustrative analysis to derive a range of implied present values of illustrative future values per share of FLIR Common Stock. For this analysis, Goldman Sachs used the Forecasts for each of the fiscal years 2022 to 2025. Goldman Sachs derived a range of implied future share prices (excluding dividends) for FLIR as of December 31 for each of the years 2021 to 2024 by applying illustrative NTM P/E multiples ranging from 16.0x to 20.0x to the NTM earnings per share estimates of FLIR, as reflected in the Forecasts. The illustrative NTM P/E multiple was derived by Goldman Sachs utilizing its professional judgment and experience, taking into account, among other things, the historical NTM P/E multiples for FLIR. Goldman Sachs then discounted the December 31, 2021 to December 31, 2024 implied future share price values back to December 31, 2020 using an illustrative discount rate of 8.25%, reflecting an estimate of FLIR’s cost of equity. Goldman Sachs derived such discount rate by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including a beta for the company, as well as certain financial metrics for the United States financial markets generally. Goldman Sachs then added, as applicable, the present value of the cumulative dividends per share expected to be paid to FLIR stockholders of $0.72, $1.48, $2.28 and $3.12 in

 

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each of the years 2021 to 2024, respectively, using the Forecasts and the same illustrative discount rate of 8.25%. This analysis resulted in a range of implied present values per share of FLIR Common Stock (including dividends), rounded to the nearest $1.00, as follows:

 

Year

   Range of
Implied
Present Values
Per Share
 

2021E

     $39 to $49  

2022E

     $41 to $52  

2023E

     $47 to $58  

2024E

     $53 to $65  

Selected Transactions Analysis

Goldman Sachs analyzed certain publicly available information relating to the following selected transactions in the industrial and defense technology industry since 2017. For each of the selected transactions where information was publicly available, Goldman Sachs calculated and compared the implied LTM EV/EBITDA multiple of the applicable target company based on the total consideration paid in the transaction as a multiple of the target company’s LTM EBITDA based on publicly available information at the time each such selected transaction was announced. While none of the target companies that participated in the selected transactions are directly comparable to FLIR, the target companies that participated in the selected transactions are companies with operations that, for the purpose of analysis, may be considered similar to certain of FLIR’s results, market size and product profile.

The following table presents the results of this analysis:

 

Selected Precedent Transactions

 

Announcement Date

 

Acquiror

 

Target

  EV
(in millions)
    LTM EV/
EBITDA
 

September 2017

  Northrop Grumman Corporation   Orbital ATK, Inc.   $ 9,200       14.4x  

October 2018

  Harris Corporation   L3 Technologies   $ 19,741       14.1x  

June 2019

  TE Connectivity Ltd.   First Sensor AG   307       12.6x  

July 2019

  Advent International Corporation   Cobham plc.   £ 3,852       12.3x  

February 2020

  Atlas Copco   ISRA Vision AG   1,094       21.0x  

December 2020

  Lockheed Martin Corporation   Aerojet Rocketdyne Holdings, Inc.   $ 4,365       16.2x  

Median

          14.2x  

Taking into account the foregoing calculations and Goldman Sachs’ analyses of the various transactions and its professional judgment, Goldman Sachs applied a reference range of LTM EV/LTM EBITDA multiples of 12.3x to 21.0x to FLIR’s Adjusted EBITDA for 2020E, as reflected in the Forecasts, to derive a range of implied enterprise values for FLIR. Goldman Sachs then subtracted from the range of implied enterprise values the net debt of FLIR, as of December 31, 2020 and as provided by the management of FLIR, to derive a range of implied equity values for FLIR. Goldman Sachs divided the results by the number of fully diluted outstanding shares of FLIR Common Stock, as provided by the management of FLIR, to derive a range of implied values per share of FLIR Common Stock, rounded to the nearest $1.00, of $39 to $68.

Premia Analysis

Goldman Sachs reviewed and analyzed, using publicly available information, the acquisition premia for 92 mixed cash and stock acquisition transactions announced during the time period from January 1, 2016 through December 31, 2020 involving a public company based in the United States as the target where the disclosed enterprise values for the transaction were greater than $500 million. Using publicly available information, Goldman Sachs calculated the average, median, 1st quartile, and 3rd quartile premia of the price paid in the

 

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transactions relative to the target’s last undisturbed closing stock price prior to the announcement of the transaction. This analysis indicated a 1st quartile premium of 8%, a 3rd quartile premium of 32%, an average premium of 21% and a median premium of 18% across the period. Using this analysis, Goldman Sachs applied a reference range of implied premiums of 8% to 32% to the undisturbed closing price per share of FLIR Common Stock of $43.83 as of the last trading date, and calculated a range of implied equity values per share of FLIR Common Stock, rounded to the nearest $1.00, of $47 to $58.

Implied Value of Consideration per Company Share

Illustrative Present Value of Future Share Price Analysis

Goldman Sachs performed an illustrative analysis to derive a range of implied present values of illustrative future values per share of common stock for the combined company. For this analysis, Goldman Sachs used the Forecasts for each of the fiscal years 2022 to 2025. Goldman Sachs derived a range of implied future share prices per share of common stock of the combined company as of December 31 for each of the years 2021 to 2024 by applying illustrative NTM P/E multiples ranging from 28.0x to 34.0x to the NTM earnings per share estimates for shares of common stock of the combined company, as reflected in the Forecasts and taking into account the Teledyne Management Synergy Projections. These illustrative NTM P/E multiples were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account, among other things, the historical NTM P/E multiples for FLIR and Teledyne. Goldman Sachs then discounted the December 31, 2021 to December 31, 2024 implied future share price values back to December 31, 2020 using an illustrative discount rate of 8.25%, reflecting an estimate of the combined company’s cost of equity. Goldman Sachs derived such discount rate by application of the Capital Asset Pricing Model, which requires certain company-specific inputs, including a beta for the company, as well as certain financial metrics for the United States financial markets generally. Goldman Sachs then multiplied this range by the exchange ratio and added the cash consideration of $28.00 and a dividend payment of $0.17 expected to be paid to FLIR stockholders prior to closing, as provided by the management of FLIR and discounted back to December 31, 2020 using the same illustrative discount rate of 8.25%, to yield a range of implied values, rounded to the nearest $1.00, of $57 to $72 for the merger consideration to be received for each share of FLIR Common Stock in the transaction. As described above under “—Opinion of FLIR’s Financial AdvisorFinancial Analyses of FLIRIllustrative Present Value of Future Share Price Analysis” Goldman Sachs calculated a range of implied present values per share of FLIR Common Stock for FLIR on a standalone basis, rounded to the nearest $1.00, as follows:

 

Year

   Range of
Implied
Present Values
Per Share
 

2021E

     $57 to $63  

2022E

     $59 to $66  

2023E

     $62 to $69  

2024E

     $64 to $72  

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No transaction used in the above analyses as a comparison is directly comparable to FLIR, Teledyne or the contemplated transaction.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the FLIR Board as to the fairness from a financial point of view of the merger consideration to be paid to the holders (other

 

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than Teledyne and its affiliates) of shares of FLIR Common Stock pursuant to the Merger Agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of FLIR, Teledyne, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The merger consideration was determined through arm’s-length negotiations between FLIR and Teledyne and was approved by the FLIR Board. Goldman Sachs provided advice to FLIR during these negotiations. Goldman Sachs did not, however, recommend any specific consideration to FLIR or the FLIR Board or that any specific consideration constituted the only appropriate consideration for the transaction.

As described above, Goldman Sachs’ opinion to the FLIR Board was one of many factors taken into consideration by the FLIR Board in making its determination to approve the transaction. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex C.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of FLIR, Teledyne, and any of their respective affiliates and third parties, or any currency or commodity that may be involved in the transaction. Goldman Sachs has provided certain financial advisory and/or underwriting services to FLIR and/or its affiliates from time to time. During the two year period ended December 20, 2020, the Investment Banking Division of Goldman Sachs has not been engaged by FLIR, Teledyne or their respective affiliates to provide financial advisory or underwriting services for which Goldman Sachs has recognized compensation. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to FLIR, Teledyne and their respective affiliates for which the Investment Banking Division of Goldman Sachs may receive compensation.

The FLIR Board selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the transaction. Pursuant to a letter agreement dated December 2, 2020, FLIR engaged Goldman Sachs to act as its financial advisor in connection with the transaction. The engagement letter between FLIR and Goldman Sachs provides for a transaction fee that is estimated, based on the information available as of the date of the announcement of the transaction, at approximately $40 million, $5 million of which became payable at announcement of the transaction, and the remainder of which is contingent upon consummation of the transaction. In addition, FLIR has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Regulatory Approvals Required for the Mergers

Completion of the Mergers is conditioned upon the receipt of certain governmental clearances or approvals as summarized below. The process for obtaining the requisite regulatory clearances or approvals for the Mergers is ongoing. Although Teledyne and FLIR currently believe they should be able to obtain all required regulatory clearances and approvals in a timely manner, the parties cannot be certain when or if they will obtain them or, if obtained, whether the clearances and approvals will contain terms, conditions or restrictions not currently contemplated that will be detrimental to Teledyne after the completion of the Mergers.

 

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Such regulatory clearances or approvals do not mean that the applicable regulatory authority has determined that the consideration to be received by holders of FLIR Common Stock and/or the Mergers are fair to Teledyne stockholders or FLIR stockholders. Regulatory clearance or approval does not constitute an endorsement or recommendation of the Mergers by any regulatory authority.

U.S. Antitrust Filing

Under the HSR Act, certain transactions, including the Mergers, may not be completed unless certain waiting period requirements have expired or been terminated early. The HSR Act provides that each party must file their respective HSR notifications with the FTC and the DOJ. A transaction notifiable under the HSR Act may not be completed until the expiration or termination of a 30-day waiting period following the parties’ filings of their respective HSR notifications or the early termination of that waiting period.

The parties’ HSR notifications were filed with the FTC and the DOJ on January 29, 2021, and termination of the waiting period under the HSR Act occurred on March 1, 2021.

At any time before or after the expiration or termination of any applicable waiting period, or any extension thereof, under the HSR Act, or before or after the Mergers are completed, the DOJ or the FTC may take action under the antitrust laws in opposition to the Mergers, including seeking to enjoin completion of the Mergers, to rescind the Mergers or to conditionally permit completion of the Mergers subject to regulatory concessions or conditions. In addition, U.S. state attorneys general could take action under the antitrust laws as they deem necessary or desirable in the public interest, including, without limitation, seeking to enjoin the completion of the Mergers or only permitting completion subject to regulatory concessions or conditions. Private parties may also seek to take legal action under the antitrust laws under some circumstances.

Although neither Teledyne nor FLIR believes that the Mergers will violate the antitrust laws, there can be no assurance that a challenge to the Mergers on antitrust grounds will not be made or, if such a challenge is made, that it would not be successful.

Non-U.S. Antitrust and other Regulatory Filings

Consummation of the Mergers is further subject to notification, clearance and/or approval under the antitrust, competition or trade regulatory laws of Turkey and China. In addition, the completion of the Mergers may be postponed, but not beyond September 30, 2021, in order to obtain clearances in any of the above-listed jurisdictions or clearance and/or approval under the foreign investment laws of Norway and Sweden to the extent required. Teledyne submitted notifications under applicable law to Norway and Sweden in January 2021.

SEC Effectiveness of Registration Statement

In connection with the Share Issuance, Teledyne has filed a registration statement with the SEC under the Securities Act, of which this joint proxy statement/prospectus is a part. The completion of the Mergers is conditioned on the registration statement being declared effective by the SEC and the absence of any stop order suspending the effectiveness of the registration statement or proceedings for such purpose initiated or threatened in writing by the SEC.

NYSE Listing

Pursuant to the Merger Agreement, the shares of Teledyne Common Stock to be issued in the Share Issuance must have been approved for listing on the NYSE, subject to official notice of issuance.

 

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Efforts to Obtain Regulatory Approvals

In the Merger Agreement, Teledyne and FLIR have agreed to use their respective reasonable best efforts, subject to certain limitations, to take, or cause to be taken, all actions necessary, proper or advisable under applicable law to consummate the transactions contemplated by the Merger Agreement, including making appropriate filings under any required regulatory filings and any other necessary, proper or advisable registrations, filings and notices. In furtherance of the foregoing, the Merger Agreement also requires Teledyne to avoid, eliminate or resolve all impediments or objections, if any, that may be asserted by any governmental authority with respect to the transactions contemplated by the Merger Agreement so as to enable the Mergers to close as promptly as reasonably practicable, subject to certain limitations described in the Merger Agreement. In addition, neither Teledyne nor FLIR may take any action in connection with the foregoing that would reasonably be expected to have a material adverse effect on the ability of Teledyne or FLIR to consummate the Mergers without the other party’s prior written consent.

In addition, Teledyne’s obligations include an obligation to defend against any action or preceding that is instituted or threatened by any governmental authority challenging the transactions contemplated by the Merger Agreement.

These requirements are described in more detail under “The Merger Agreement—Efforts to Complete the Mergers” beginning on page 127 of this joint proxy statement/prospectus.

No Assurances of Obtaining Approvals

There can be no assurances that any of the regulatory approvals described above will be obtained and, if obtained, there can be no assurance as to the timing of such approvals, the ability to obtain such approvals on satisfactory terms or the absence of any litigation challenging such approvals.

Timing

Subject to certain conditions, if the Mergers are not completed on or before June 30, 2021, which date may be extended to September 30, 2021 by either Teledyne or FLIR if the only closing condition not yet satisfied relates to the failure to obtain certain regulatory clearances or approvals specified in the Merger Agreement, either Teledyne or FLIR may terminate the Merger Agreement. See “The Merger Agreement—Termination of the Merger Agreement” beginning on page 137 of this joint proxy statement/prospectus.

Dissenters’ or Appraisal Rights

FLIR stockholders are entitled to appraisal rights (sometimes called dissenting stockholders’ or objecting stockholders’ rights) in connection with the Mergers. Appraisal rights are statutory rights of stockholders who have not voted in favor of the transaction and have complied with the other requirements of Section 262 of the DGCL to demand and receive payment of the fair value of their shares in certain circumstances as determined in accordance with the DGCL instead of receiving the consideration offered to stockholders in connection with the transaction. For information about how a FLIR stockholder may exercise his, her or its appraisal rights, please see “Appraisal Rights of FLIR Stockholders” beginning on page 196 of this joint proxy statement/prospectus.

Teledyne stockholders are not entitled to appraisal or dissenters’ rights in connection with the Mergers.

Accounting Treatment

In accordance with current accounting guidance, the Mergers will be accounted for using the acquisition method. As a result, the recorded assets and liabilities of Teledyne will be carried forward at their carrying values and the historical operating results for Teledyne will be unchanged for prior periods. The assets and liabilities of

 

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FLIR will be adjusted to their respective fair values at the closing date of the Mergers, including any identifiable intangible assets acquired. In addition, any excess of the purchase price over the fair value of the net assets acquired will be recorded as goodwill. The purchase price will be comprised of the closing date fair value of Teledyne Common Stock to be issued to FLIR stockholders and cash consideration payable in connection with the Mergers. In accordance with current accounting guidance, goodwill and any indefinite-lived intangible assets will not be amortized but will be evaluated for impairment annually and under certain circumstances. Identified finite-lived intangible assets will be amortized over their estimated lives and tested for impairment when indicators of impairment exist. Further, the acquisition method of accounting will result in the operating results of FLIR being included in the operating results of Teledyne beginning from the date of completion of the Mergers.

Listing of Shares of Teledyne Common Stock and Delisting and Deregistration of Shares of FLIR Common Stock

Teledyne will make, or cause to be made, an application to the NYSE to have the shares of Teledyne Common Stock to be issued in the Mergers approved for listing on the NYSE, where shares of Teledyne Common Stock are currently traded. If the Mergers are completed, shares of FLIR Common Stock will no longer be listed on NASDAQ and will be deregistered under the Exchange Act.

No Financing Condition

The obligation of Teledyne to complete the transactions contemplated by the Merger Agreement is not subject to a financing condition. Teledyne intends to fund the cash portion of the consideration for the Mergers with a combination of cash on hand and borrowings. Other fees and expenses required to be paid in connection with the Mergers, and the refinancing of certain existing indebtedness, will be paid by Teledyne using a combination of borrowings and cash on hand.

Litigation Related to the Mergers

Teledyne, FLIR and members of the FLIR Board are parties to various claims and litigation related to the Merger Agreement and the Mergers.

On March 15, 2021, a complaint, captioned Baird v. FLIR Systems et al., Case 1:21-cv-02251, was filed in the U.S. District Court for the Southern District of New York in connection with the Mergers (the “Baird Action”). The complaint in the Baird Action names as defendants FLIR and each director of the FLIR Board. The complaint in the Baird Action alleges that FLIR and the FLIR Board omitted material information and/or provided misleading information in the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part in violation of the Exchange Act and related SEC regulations. The Baird Action seeks, among other things, an injunction preventing the holding of the FLIR Special Meeting and the closing of the Mergers unless and until FLIR discloses information allegedly omitted from the registration statement, damages and an award of plaintiffs’ attorneys’ and experts’ fees.

On March 18, 2021, a complaint, captioned Johnson v. FLIR Systems et al., Case 1:21-cv-02394, was filed in the U.S. District Court for the Southern District of New York in connection with the Mergers (the “Johnson Action”). The complaint in the Johnson Action names as defendants FLIR, each director of the FLIR Board, Teledyne, Merger Sub I and Merger Sub II. The complaint in the Johnson Action alleges that FLIR, the FLIR Board, Teledyne, Merger Sub I and Merger Sub II omitted material information and/or provided misleading information in the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part in violation of the Exchange Act and related SEC regulations. The Johnson Action seeks, among other things, an injunction preventing the closing of the Mergers, rescission of the Mergers if they are consummated, dissemination of a revised registration statement and an award of plaintiffs’ attorneys’ and experts’ fees.

On March 23, 2021, a complaint, captioned Hayman v. FLIR Systems et al., Case 1:21-cv-02490, was filed in the U.S. District Court for the Southern District of New York in connection with the Mergers (the “Hayman

 

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Action”). The complaint in the Hayman Action names as defendants FLIR and each director of the FLIR Board. The complaint in the Hayman Action alleges that FLIR and the FLIR Board omitted and/or provided misleading information in the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part in violation of the Exchange Act and related SEC regulations. The Hayman Action seeks, among other things, an injunction preventing the closing of the Mergers, dissemination of a revised registration statement, damages and an award of plaintiffs’ attorneys’ and experts’ fees.

On March 23, 2021, a complaint, captioned Keller v. FLIR Systems et al., Case 1:21-cv-01542, was filed in the U.S. District Court for the Eastern District of New York in connection with the Mergers (the “Keller Action”). The complaint in the Keller Action names as defendants FLIR and each director of the FLIR Board. The complaint in the Keller Action alleges that FLIR and the FLIR Board omitted and/or provided misleading information in the registration statement on Form S-4 of which joint proxy statement/prospectus forms a part in violation of the Exchange Act and related SEC regulations The Keller Action seeks, among other things, an injunction preventing the closing of the Mergers and the holding of vote on the Mergers at the FLIR Special Meeting, rescission of the Mergers if they are consummated and the award of plaintiffs’ attorneys’ and experts’ fees.

On April 8, 2021, a complaint, captioned Coffman v. FLIR Systems et al., Case 2:21-cv-03059, was filed in the U.S. District Court for the Central District of California in connection with the Mergers (the “Coffman Action”). The complaint in the Coffman Action names as defendants FLIR and each director of the FLIR Board. The complaint in the Coffman Action alleges that FLIR and the FLIR Board omitted material information and/or provided misleading information in the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part in violation of the Exchange Act and related SEC regulations. The Coffman Action seeks, among other things, an injunction preventing the holding of the FLIR Special Meeting and the closing of the Mergers unless and until FLIR discloses information allegedly omitted from the registration statement, damages and an award of plaintiffs’ attorneys’ and experts’ fees.

Teledyne, the Teledyne Board, FLIR and the FLIR Board believe that the claims asserted in each suit are without merit and intend to defend vigorously against the claims.

 

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THE MERGER AGREEMENT

This section of this joint proxy statement/prospectus summarizes the material provisions of the Merger Agreement. The summary set forth below and elsewhere in this joint proxy statement/prospectus is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached as Annex A to this joint proxy statement/prospectus and is incorporated into this joint proxy statement/prospectus by reference. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you. You should read the Merger Agreement carefully in its entirety, as it is the legal document governing the transaction.

The Merger Agreement and the following summary have been included to provide you with information regarding the terms and conditions of the Merger Agreement and the transactions contemplated thereby. They are not intended to provide any other factual information about Teledyne, Merger Sub I, Merger Sub II or FLIR or any of their respective subsidiaries or affiliates. That information can be found elsewhere in this joint proxy statement/prospectus and in the other public documents that Teledyne and FLIR file with the SEC. The provisions of the Merger Agreement and the description of such provisions in this joint proxy statement/prospectus should not be read alone but instead should be read in conjunction with the other information contained in the reports, statements and filings that each of Teledyne and FLIR files with the SEC and the other information in this joint proxy statement/prospectus. See the section titled “Where You Can Find More Information” beginning on page 205 of this joint proxy statement/prospectus.

The representations, warranties and covenants contained in the Merger Agreement (and summarized below) were made only for purposes of that agreement and as of specific dates, were solely for the benefit of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified by disclosures not reflected in the Merger Agreement, were made for the purpose of allocating contractual risk between the parties to the Merger Agreement instead of establishing matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to you and other investors and reports and documents filed with the SEC. You are not third party beneficiaries under the Merger Agreement and you should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Teledyne, Merger Sub I, Merger Sub II or FLIR or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Teledyne’s or FLIR’s public disclosures.

Structure and Completion of the Mergers

On the terms and subject to the conditions set forth in the Merger Agreement, (i) Merger Sub I will merge with and into FLIR, with FLIR continuing as the surviving corporation of the First Merger, and (ii) immediately following the completion of the First Merger, FLIR, as the surviving corporation of the First Merger, will merge with and into Merger Sub II, with Merger Sub II surviving the Second Merger and continuing as a wholly owned subsidiary of Teledyne. At the effective time of the Second Merger, it is expected that the surviving company will change its name to Teledyne FLIR, LLC. As a result of the Mergers, FLIR will cease to be an independent, publicly-traded company.

The closing of the transactions contemplated by the Merger Agreement will occur on a date no later than the third business day after the date upon which all of the conditions to closing contained in the Merger Agreement (other than those conditions that may only be satisfied on the closing date, but subject to the satisfaction of such conditions) are satisfied or waived (or on such other date as Teledyne and FLIR may agree). See the section titled “— Conditions to Completion of the Mergers” beginning on page 120 of this joint proxy statement/prospectus.

The First Merger will become effective at the time that a certificate of merger with respect to the First Merger (“certificate of merger I”) has been filed with, and accepted by, the Secretary of State of the State of

 

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Delaware, or at such later date and time agreed to by the parties and specified in certificate of merger I. Immediately following the Effective Time, a certificate of merger with respect to the Second Merger (“certificate of merger II”) will be filed with the Secretary of State of the State of Delaware. The Second Merger will become effective at the time that certificate of merger II has been filed with, and accepted by, the Secretary of State of the State of Delaware, or at such later date and time agreed to by the parties and specified in certificate of merger II.

The closing of the Mergers is expected to occur by the second or third quarter of 2021.

Merger Consideration

The Merger Agreement provides that at the Effective Time, each share of FLIR Common Stock issued and outstanding immediately prior to the Effective Time (other than shares owned or held by (x) Teledyne or any of its subsidiaries, (y) in treasury or otherwise by FLIR or any of its subsidiaries and (z) any person who is entitled to demand and properly demands appraisal of such shares under Delaware law) will automatically be cancelled and converted into the right to receive (i) $28.00 in cash, without interest, and (ii) 0.0718 shares of Teledyne Common Stock (subject to adjustment in the event there is any change in the outstanding shares or classes of capital stock of Teledyne or FLIR as a result of any reclassification, stock split (including a reverse stock split), recapitalization, split-up, combination, exchange of shares, readjustment or other similar transaction, or any stock dividend or stock distribution that is declared).

Manner and Procedure for Exchanging Shares of FLIR Common Stock; No Fractional Shares

Prior to the Effective Time, Teledyne will deposit with the exchange agent (i) the full number of shares of Teledyne Common Stock (which will be in uncertificated book-entry form) necessary to pay the aggregate stock portion of the merger consideration and (ii) all of the cash necessary to pay the aggregate cash portion of the merger consideration. For purposes of this deposit, Teledyne will make available to the exchange agent, for addition to the exchange fund, cash sufficient to pay cash in lieu of fractional shares of Teledyne Common Stock in accordance with the Merger Agreement. After the Effective Time on the appropriate payment date, if applicable, Teledyne will provide or cause to be provided to the exchange agent any dividends or other distributions payable on such shares of Teledyne Common Stock pursuant to the Merger Agreement.

Teledyne will instruct the exchange agent to mail, as soon as reasonably practicable after the Effective Time (and in any event within five business days following the Effective Time), to each FLIR stockholder whose shares of FLIR Common Stock were converted into the right to receive the merger consideration pursuant to the Merger Agreement a letter of transmittal and instructions for use in effecting the surrender of the share certificates (or duly executed affidavit of loss in lieu thereof) in exchange for the merger consideration. Upon surrender of a share certificate (or duly executed affidavit of loss in lieu thereof) for cancellation to the exchange agent and a duly executed and properly completed letter of transmittal, and other documents as may reasonably be required by the exchange agent, the holder of such share certificate will be entitled to receive the merger consideration and cash in lieu of fractional shares of Teledyne Common Stock, and the share certificate so surrendered will be cancelled.

In the event of a transfer of ownership of shares of FLIR Common Stock that is not registered in the transfer records of FLIR, payment may be made and shares of Teledyne Common Stock may be issued to a person other than the person in whose name the share certificate so surrendered is registered, if such share certificate is properly endorsed or otherwise is in proper form for transfer and the person requesting such payment will pay any transfer or other required taxes or establishes to the satisfaction of Teledyne that such tax has been paid or is not applicable.

Teledyne will not issue share certificates or scrip representing fractional shares of Teledyne Common Stock in the Mergers and such fractional share interests will not entitle the owner to vote or to any rights of a holder of Teledyne Common Stock. In lieu of any fractional shares, each holder of shares of FLIR Common Stock who

 

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would otherwise be entitled to a fractional share of Teledyne Common Stock will be entitled to receive a cash payment, without interest, rounded down to the nearest cent, from the exchange agent, in an amount equal to the product of (i) the amount of the fractional interest in a share of Teledyne Common Stock to which such holder is entitled under the Merger Agreement and (ii) $389.96.

Any holder of any book-entry shares whose shares of FLIR Common Stock were converted into the right to receive the merger consideration will not be required to deliver a share certificate or an executed letter of transmittal or any other deliverables to the exchange agent to receive the merger consideration. Instead, Teledyne will cause the exchange agent to pay and deliver, as soon as reasonably practicable after the Effective Time (and in any event within five business days following the Effective Time), to each holder of any book-entry shares the applicable merger consideration, including any cash in lieu of fractional shares of Teledyne Common Stock and any amounts that such holder has the right to receive in respect of dividends or other distributions on shares of Teledyne Common Stock, and the book-entry shares so exchanged will be cancelled.

Dividends with Respect to Unexchanged Shares

Following the surrender of a share certificate formerly representing shares of FLIR Common Stock (or affidavit of loss in lieu thereof) or conversion of book-entry shares pursuant to the Merger Agreement, holders of shares of FLIR Common Stock will be entitled to (i) at time of such surrender or delivery, as the case may be, the amount of any cash payable in lieu of a fractional share of Teledyne Common Stock to which such holder is entitled and the amount of dividends or other distributions with a record date after the Effective Time which have been paid with respect to such whole shares of Teledyne Common Stock and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to such surrender of share certificates or delivery, as the case may be, and a payment date subsequent to such surrender or delivery payable with respect to such whole shares of Teledyne Common Stock, in each case without interest.

Termination of Exchange Fund

Any portion of the exchange fund that remains undistributed to former holders of FLIR Common Stock for one year after the Effective Time will be delivered to Teledyne. Thereafter, FLIR stockholders must look only to Teledyne for payment of the merger consideration and any dividends or distributions with respect to shares of Teledyne Common Stock.

No Liability

None of Teledyne, Merger Sub I, Merger Sub II, FLIR, or the exchange agent will be liable to any holder of FLIR Common Stock for any amount of merger consideration properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

Appraisal Rights of FLIR Stockholders

The Merger Agreement provides that shares of FLIR Common Stock held by those stockholders who are entitled to demand and properly demand appraisal pursuant to Section 262 of the DGCL will not be converted into merger consideration pursuant to the Merger Agreement, but instead will entitle the holders of such shares to receive payment of the fair value of their shares as determined in accordance with Delaware law. If any holder who was entitled to dissenters’ rights fails to perfect or otherwise waives, withdraws or loses the right to appraisal under Section 262 of the DGCL, then the right of such holder to be paid the fair value of such holder’s shares of FLIR Common Stock will cease, such shares shall be deemed to have been converted as of the Effective Time into, and will have become exchangeable solely for the right to receive the merger consideration as provided in the Merger Agreement.

FLIR has agreed to serve prompt notice to Teledyne of any demands received by FLIR for appraisal of any shares of FLIR Common Stock, and Teledyne will have the right to participate in and direct all negotiations and