After a stunning 2019, Gilat has announced it will be sold to Comtech Telecommunications for a grand price of $532.5m. Comtech expects this deal to help it capitalize on the large anticipated demand for ground segment infrastructure.
Comtech does some serious shopping
The purchase of Gilat was announced on January 30th, at a total price of $532.5m. This equates to $10.25 per share, with 70% of the deal paid for in cash and 30% in Comtech stock. The resulting combined company will easily become a global leader in satellite communications, with Comtech estimating an annual sales figure of some $1bn.
Fred Kornberg, Chairman of the Board and CEO of Comtech, commented on the purchase saying,
“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.”
As well as the deal involving Gilat, Comtech is also investing in UK based antenna builder CGC Technology Limited. Comtech will buy the British firm for an estimated sum of $23.7m.
What will Comtech get from Gilat?
Comtech has made it clear that it believes the demand for satellite communications will only go one way. It wants to be ahead of the game, and believes its investment in Gilat will do this for the company. While Comtech has a substantial business in selling satellite ground equipment to the US government, Gilat is seen to be more successful in international markets. This should make the two companies a perfect pairing.
Gilat will bring expertise in a number of areas. These include Time Division Multiple Access, or TDMA, as well as its next gen solid state amplifiers, which will expand Comtech’s product portfolio extensively. The company says that no facilities are expected to close as part of the deal, and that the combined workforce of 3,000 people can be confident about keeping their jobs.
Chairman of the board at Gilat, Dov Baharav, was very positive about the sale, commenting in a press release,
“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, a company that has been around since 1987, will retain its branding even after the deal is closed. Comtech’s CEO, Fred Kornberg, will become CEO of the combined company, and Comtech will maintain its headquarters in Melville, New York. Gilat’s CEO will remain in place, and will oversee the operations at Gilat’s HQ in Petah Tikvah, Israel.