Movers and SHAKERS
Comtech Telecommunications Corporation (CMTL)
Implications of a Terminated Merger
Comtech Telecommunications Corp. engages in the design, development, production, and marketing of products, systems, and services for advanced communications solutions in the United States and internationally. It operates in three segments: Telecommunications Transmission, Mobile Data Communications, and RF Microwave Amplifiers. The Telecommunications Transmission segment provides satellite earth station equipment and systems, over-the-horizon microwave systems, and forward error correction technology, which are used in various commercial and government applications, including backhaul of wireless and cellular traffic, broadcasting (including HDTV), IP-based communications traffic, long distance telephony, and secure defense applications. The Mobile Data Communications segment provides mobile satellite transceivers, and computers and satellite earth station network gateways and associated installation, training, and maintenance services; supplies and operates satellite packet data networks, including arranging and providing satellite capacity; and offers microsatellites and related components. The RF Microwave Amplifiers segment designs, develops, manufactures, and markets satellite earth station traveling wave tube amplifiers (TWTA) and broadband amplifiers. Its amplifiers are used in broadcast and broadband satellite communication; defense applications, such as telecommunications systems and electronic warfare systems; and commercial applications comprising oncology treatment systems, as well as to amplify signals carrying voice, video, or data for air-to-satellite-to-ground communications. The company serves satellite systems integrators, wireless and other communication service providers, broadcasters, defense contractors, military, governments, and oil companies. Comtech markets its products through independent representatives and value-added resellers. The company was founded in 1967 and is headquartered in Melville, New York.
Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Gilat Merger Terminated. Yesterday, Comtech announced it and Gilat had mutually agreed to terminate the acquisition announced in January. Litigation, which was supposed to start October 5th, was dismissed, with prejudice. As part of the agreement, Comtech will pay $70 million to Gilat, which can be viewed as $45 million to reimburse Gilat for expenses and $25 million as a "termination" fee.
Why? Basically, uncertainty regarding Gilat's future IFEC business, along with a potentially unsustainable debt load. One of the original driving forces for the deal was Gilat's in flight entertainment business, a business that has suffered a serious setback given the state of the travel industry, with some experts expecting a multi-year recovery period for the travel business. If the merger had ...
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.