Comtech Telecommunications Corp. to Acquire Gilat Satellite Networks for $532.5 Million in a Strategic and Cash Accretive Transaction
Based on Comtech’s fiscal year 2019 actual results and Gilat’s trailing twelve-month results through
Key Strategic Benefits for Comtech Include:
-
Drives global market access by creating a world leader with combined pro-forma sales approaching nearly
$1.0 billion annually;
- Strengthens Comtech’s position as a leading supplier of advanced communication solutions, uniquely capable of servicing the expanding need for ground infrastructure to support both existing and emerging satellite networks;
- Expands Comtech’s product portfolio with highly complementary technologies, including Gilat’s high-performance TDMA-based satellite modems and its next generation solid-state amplifiers;
- Broadens leadership position in the rapidly growing in-flight connectivity and cellular backhaul markets which are expected to expand given the availability of lower-cost bandwidth and the adoption of satellite technologies into the 5G cellular backhaul ecosystem;
-
Bolsters world-class research and development capabilities, enabling
Comtech to offer customers more complete end-to-end technology solutions;
- Enhances ability to accelerate shareholder value creation by contributing to Comtech’s ongoing strategy to move toward higher margin solutions and by increasing customer diversification geographically and by market; and
-
Potentially offers increased liquidity for existing and new
Comtech shareholders, asComtech plans to pursue a dual listing on theNasdaq andTel Aviv Stock Exchange (“TASE”) to become effective upon the closing of the transaction.
Acquisition Expected to be Cash Accretive and Have Minimal Integration Risks
Excluding the impact of acquisition plan costs (including transaction expenses) and with conservative anticipated synergies of only
Both companies’ talented global workforces are expected to remain in place and focus intently on meeting all customer commitments and expectations, including supporting all existing products, services and agreements. The transaction enlarges Comtech’s global market footprint with a significant physical presence in key international markets. This increased presence addresses a growing need for local touch points that can offer integrated secure connectivity solutions including public safety and location solutions. At the same time, Gilat will gain access to Comtech’s strong relationships with the U.S. government, allowing expanded distribution of Gilat’s products and solutions to the U.S. government. As such,
Gilat announced on
In light of the agreement between
Leadership and Business Structure
Post-closing of the transaction, Gilat will become a wholly owned subsidiary of
No
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
The total consideration of
Upon completion of the transaction, Gilat’s shareholders will own approximately 16.1% of the combined company.
Financing and Acquisition Plan Expenses
As of
On a pro forma basis including preliminary estimated combined acquisition plan expenses of approximately
In connection with the acquisition of Gilat,
Shareholder Support and Closing Conditions
Gilat’s directors, executive officers and certain significant shareholders holding approximately 45% of Gilat’s issued and outstanding shares in the aggregate have entered into voting agreements pursuant to which they have agreed, subject to certain terms and conditions, to vote in favor of the transaction. In the upcoming weeks, Gilat will call for an Extraordinary General meeting of Shareholders to vote on the merger. The transaction requires the affirmative vote of the holders of a majority of the ordinary shares present (in person or by proxy) at the meeting and voting on such matter (including abstentions and broker non-votes).
The transaction is subject to customary closing conditions (including, among others, the approval of Gilat’s shareholders and expiration of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976) and the transaction is expected to close late in Comtech’s fiscal year 2020 or the first part of its fiscal 2021. No approval by
CGC Technology Acquisition
Conference Call, Investor Presentation and Other Information
Comtech’s management will discuss the transaction in more detail at a special conference call and live webcast scheduled for this morning (
Investors are invited to access a live webcast of the conference call from the Investor Relations section of the
Advisors
Additional Information and Where to Find It
This press release is being made in respect of a proposed business combination involving
This press release is not a substitute for any prospectus, proxy statement or any other document that
You may obtain copies of all documents filed with the
About
About Gilat
Gilat’s comprehensive solutions support multiple applications with a full portfolio of products to address key applications including broadband access, cellular backhaul, enterprise, in-flight connectivity, maritime, trains, defense and public safety, all while meeting the most stringent service level requirements. For more information, please visit: www.gilat.com.
Forward-Looking Statements
Certain information in this press release contains forward-looking statements, including, but not limited to, information relating to Comtech’s and Gilat’s future performance and financial condition, plans and objectives of
Use of Non-GAAP Financial Information
Excludes Synergies |
||||||
Comtech | Gilat | |||||
($ in millions) | Four Fiscal Quarters Ended: | Pro Forma | ||||
July 31, 2019 | June 30, 2019 | Combined(2) | ||||
Reconciliation of GAAP Net Income to | ||||||
Adjusted EBITDA(1): | ||||||
Net income |
$ |
25.0 |
$ |
20.2 |
$ |
45.2 |
Provision for (benefit from) income taxes |
|
3.9 |
|
(0.9) |
|
3.0 |
Interest income and other |
|
- |
|
- |
|
- |
Write-off of deferred financing costs |
|
3.2 |
|
- |
|
3.2 |
Interest expense |
|
9.2 |
|
3.5 |
|
12.8 |
Amortization of stock-based compensation |
|
11.4 |
|
1.8 |
|
13.2 |
Amortization of intangibles |
|
18.3 |
|
1.1 |
|
19.5 |
Depreciation |
|
11.9 |
|
10.5 |
|
22.4 |
Estimated contract settlement costs |
|
6.4 |
|
- |
|
6.4 |
Settlement of intellectual property litigation |
|
(3.2) |
|
- |
|
(3.2) |
Acquisition plan expenses |
|
5.9 |
|
- |
|
5.9 |
Facility exit costs |
|
1.4 |
|
- |
|
1.4 |
Trade secret litigation |
|
- |
|
(0.1) |
|
(0.1) |
Reorganization costs |
|
- |
|
0.6 |
|
0.6 |
Adjusted EBITDA |
$ |
93.5 |
$ |
36.7 |
$ |
130.2 |
Note: Totals may not foot due to rounding
1. The Company's Adjusted EBITDA is a Non-GAAP measure that represents earnings (loss) before income taxes, interest (income) and other, write-off of deferred financing costs, interest expense, amortization of stock-based compensation, amortization of intangible assets, depreciation expense, estimated contract settlement costs, acquisition plan expenses or strategic alternatives analysis expenses, facility exit costs, settlement of intellectual property litigation and other. The Company's definition of Adjusted EBITDA may differ from the definition of EBITDA used by other companies and therefore may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA is also a measure frequently requested by the Company's investors and analysts. The Company believes that investors and analysts may use Adjusted EBITDA, along with other information contained in its
2. Pro forma combined results exclude all expenses resulting from the acquisition (including, for example, changes in interest expense associated with the credit facility commitment received by
PCMTL
View source version on businesswire.com: https://www.businesswire.com/news/home/20200129005388/en/
Source:
For Gilat Satellite Networks
Media and Investor Relations
Doreet Oren, Director Corporation Communications
DoreetO@gilat.com
or
June Filingeri, of Comm-Partners LLC
+1-203-972-0186
junefil@optonline.net
For Comtech Telecommunications Corp.
Media or Investor Relations
Michael D. Porcelain, President and Chief Operating Officer
631-962-7000
info@comtechtel.com