Comtech Telecommunications Corp. to Acquire Gilat Satellite Networks for US$ 532.5 Million
Melville, NY, January 29, 2020--Comtech Telecommunications Corp. (Nasdaq: CMTL) and Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE: GILT) announced today that Comtech has agreed to acquire Gilat in a cash and stock transaction for US$ 10.25 per Gilat ordinary share of which 70% will be paid in cash and 30% in Comtech common stock, resulting in an enterprise value of approximately US$ 532.5 million.
Founded in 1987 with its headquarters in Israel, Gilat is a leader in satellite networking technology, solutions and services with market leading positions in the satellite ground station and in-flight connectivity solutions markets and expertise in operating large network infrastructures.
Based on Comtech’s fiscal year 2019 actual results and Gilat’s trailing twelve-month results through June 30, 2019, on a pro-forma basis, Comtech would have reported approximately US$ 926.1 million of revenue with Adjusted EBITDA of approximately US$ 130.2 million (see definition and reconciliation to GAAP financial measures in the table below). The combined companies would employ approximately 3,000 people and offer satellite technology, public safety and location technology and secure wireless solutions to commercial and government customers around the world.
Fred Kornberg, Chairman of the Board and CEO of Comtech, said, “I am excited to have reached this agreement with Gilat and believe this combination is beneficial to the stakeholders of both companies. 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. 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. Gilat is an exceptional business that has developed extraordinary technology and has a well-respected product portfolio supported by strong research and development capabilities. I welcome Gilat’s entire talented workforce to the Comtech family.”
Dov Baharav, Chairman of the Board of Gilat, said, “The Gilat Board of Directors and management believe this highly strategic combination is compelling. It is an excellent outcome for our shareholders who receive both cash and an equity interest in a strong company with a broader range of products and the benefits of combined expertise and resources that is well positioned to create future value against a highly favorable industry backdrop. I have long admired Comtech’s commitment to technology leadership and I firmly believe that employees will have expanded opportunities for career development. No doubt, the future will be very bright for Comtech and Gilat and all of our stakeholders.”
Gilat announced on November 19, 2019 that it expects to achieve sales of between US$ 260.0 million and US$ 270.0 million with Adjusted EBITDA ranging from US$ 38.0 million to US$ 42.0 million for its fiscal year ended December 31, 2019. Comtech announced on December 4, 2019 that it expects to achieve sales of between US$ 712.0 million and US$ 732.0 million with Adjusted EBITDA ranging from US$ 99.0 million to US$ 103.0 million for its fiscal year ending July 31, 2020. Neither Comtech nor Gilat is revising their previously announced respective fiscal year financial outlook.
Leadership and Business Structure
Fred Kornberg, Comtech’s Chairman of the Board and CEO will continue in his role as CEO of the combined company. Michael Porcelain, Comtech’s Chief Operating Officer, who was promoted and named President of Comtech earlier today, will work hand-in-hand with both Comtech and Gilat employees to maximize the potential of the combined company. Michael Bondi will continue in his role as Chief Financial Officer of the combined company. Comtech will continue to maintain its headquarters in Melville, New York.
Post-closing of the transaction, Gilat will become a wholly owned subsidiary of Comtech and will maintain its brand. Gilat will continue to maintain its corporate headquarters and research and development facility in Petah Tikva, Israel under the leadership of Yona Ovadia, Gilat’s CEO and Adi Sfadia, Gilat’s CFO. Sfadia will also be assuming the role of Gilat’s Chief Integration Officer, helping to plan a smooth acquisition and to maximize shareholder value.
No Comtech or Gilat facility locations are expected to be closed as a result of the transaction and each key business area is expected to continue to be led by its respective existing leadership teams after the transaction closes.
Transaction Structure and Terms
Under the terms of the agreement, unanimously approved by both companies’ Board of Directors, Gilat shareholders will receive total consideration of US$ 10.25 per share, comprised of $7.18 per share in cash and 0.08425 of a share of Comtech common stock for each share of Gilat held.
The total consideration of US$ 10.25 represents a premium of approximately 14.52% to Gilat’s 90-day volume-weighted average trading price.
Upon completion of the transaction, Gilat’s shareholders will own approximately 16.1% of the combined company.
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