Comtech to Acquire Gilat in $532.5M Cash-and-Stock Deal; Fred Kornberg Quoted

Jeff Brody
Fred Kornberg

Comtech Telecommunications (Nasdaq: CMTL) has agreed to buy Gilat Satellite Networks (Nasdaq: GILT) for $10.25 per share or approximately $532.5M in cash and stock.

Gilat stockholders will receive a cash payment of $7.18 per share plus 0.08425 shares in Comtech for every Gilat share held and will own approximately 16.1 percent of the combined firm upon the deal’s completion, Comtech said Wednesday.

Comtech expects the deal to close in late fiscal year 2020 or the early part of FY 2021, subject to approval of Gilat’s shareholders and other customary closing conditions.

Israel-based Gilat, which was established in 1987, provides satellite networking technology and services. The company’s portfolio includes cloud-based VSAT network platform, high-performance antennas, high-speed modems, block upconverters and solid state amplifiers.

“The acquisition better positions Comtech to take advantage of key marketplace trends, particularly the growing demand for satellite connectivity and the enormous long-term opportunity set that is emerging in the secure wireless communications market,” said Fred Kornberg, board chairman and CEO of Comtech. “I believe that the combination of accelerating satellite connectivity demand and the increasing availability of low-cost satellite bandwidth, makes this a perfect time to unify Comtech and Gilat’s solutions and offer our combined customers best-in-class platform-agnostic satellite ground station technologies.”

The combined companies will operate with approximately 3K employees and provide satellite technology, wireless platforms, location and public safety systems to government and commercial clients worldwide.

The transaction will create a company with combined pro-forma sales of nearly $1B annually and help Comtech expand its presence in cellular backhaul and in-flight connectivity markets, broaden its product portfolio and build up its research and development capabilities.

Comtech will maintain its headquarters in Melville, N.Y., and Kronberg will continue to serve as CEO of the combined firm. Michael Porcelain, chief operating officer of Comtech, has been promoted to president of the telecommunications firm. Michael Bondi will continue to serve as chief financial officer of the combined company.

Upon the deal’s completion, Gilat will operate as Comtech's wholly owned subsidiary, keep its brand and maintain its headquarters and R&D facility in Petah Tikva, Israel, under the leadership of CEO Yona Ovadia. Adi Sfadia, chief financial officer of Gilat, will assume additional responsibilities as chief integration officer.

The transaction is not expected to result in closures of any Comtech or Gilat locations and respective leadership teams will continue to oversee each business area once the acquisition closes.

Goldman Sachs and Co. serves as Comtech’s exclusive financial adviser in the transaction, while Proskauer Rose LLP and Goldfarb Seligman & Co. advise the company on the deal’s legal aspect. Alnitak & Co., Quilty Analytics and Jefferies act as Gilat’s financial advisers and Naschitz Brandes Amir & Co. serves as legal counsel.

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