US Comtech Telecommunications Corp. said Wednesday it will buy Israel’s Gilat Satellite Networks Ltd. for $532.5 million in a cash and share deal.
Founded in 1987 with its headquarters in Petah Tikva, Israel, Gilat is a maker of satellite networking technologies and services. Its product portfolio includes a cloud-based VSAT network platform, high-speed modems, high performance on-the-move antennas and high-efficiency, high-power amplifiers.
Comtech, a maker of products, systems and services for advanced communications solutions, has agreed to acquire Gilat in a cash and stock transaction for $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 $532.5 million, the two companies said in a statement. The price is a premium of some 14.52% to Gilat’s 90-day volume-weighted average trading price, the statement said.
Upon completion of the transaction, Gilat’s shareholders will own approximately 16.1% of the combined company.
The combined companies will employ some 3,000 people and offer satellite technology, public safety and location technology and secure wireless solutions to commercial and government customers around the world, the statement said.
Following the deal, Comtech will seek to dual list its shares on the Tel Aviv Stock Exchange, the statement said. The US company’s shares are currently listed on the Nasdaq, while the shares of Gilat are listed on both exchanges.
“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, Chairman of the Board and CEO of Comtech in the statement. “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 has “developed extraordinary technology and has a well-respected product portfolio supported by strong research and development capabilities,” he added.
The deal will create a company with combined pro-forma sales of close to $1 billion annually, the statement said, and strengthens Comtech’s position as a supplier of advanced communication solutions by expanding Comtech’s product portfolio with complementary technologies, including Gilat’s high-performance satellite modems and its next generation solid-state amplifiers.
The deal also bolsters the research and development capabilities of the US firm, enabling Comtech to offer customers more complete end-to-end technology solutions, the statement added.
Both companies’ global workforces are expected to remain in place, the statement said. On closing of the deal, Gilat will become a wholly owned subsidiary of Comtech, but will maintain its own brand. Comtech’s Kornberg will continue in his role as CEO of the combined company, and Comtech will continue to maintain its headquarters in Melville, New York.
Gilat will continue to maintain its corporate headquarters and research and development facility in Petah Tikva under the leadership of Yona Ovadia, its CEO.
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 teams after the transaction closes, the statement added.
Gilat announced on November 19, 2019 that it expects to achieve sales of between $260.0 million and $270.0 million for its fiscal year ended December 31, 2019. Comtech said on December 4, 2019 that it expects to achieve sales of between $712.0 million and $732.0 million for its fiscal year ending July 31, 2020. Neither Comtech nor Gilat is revising their previously announced respective fiscal year financial outlook, the statement said.
The transaction is subject to customary closing conditions including the approval of Gilat’s shareholders.