Comtech of Melville buys California firm for $472M

A major Long Island defense electronics maker, Comtech Telecommunications Corp., has broadened its product line with the nearly half-billion dollar acquisition of a California company.

Comtech announced the sale Monday, saying it had bought Communications & Power Industries International Inc., known as CPI, of Palo Alto, Calif., for $472 million in cash and shares.

The deal is "very positive" for Comtech, financial analyst James McIlree, of Merriman Curhan Ford, in San Francisco, said Monday.

"It bulks up a key business area for them," McIlree said. He said Comtech paid a reasonable price for CPI, and he expects it will quickly add to Comtech's earnings.

CPI's defense expertise lies in the production of a highly regarded line of vacuum tubes that, installed on U.S. Navy warships, allows sailors to better detect and disable radar-guided enemy weapons.

CPI also makes products for radar navigation, medical diagnostic imaging systems and cancer treatment technology using microwave energy.

With a market capitalization of $263 million, CPI had 2009 net income of $20 million on $338 million in sales.

In comparison, Comtech had a market capitalization of $912 million, with a $50-million profit on $586 million in 2009 revenue.

CPI's products allow warships "to share information and intelligence more quickly and efficiently," CPI said in a statement. "The terminals are also intended to improve the quality of life for these war fighters by increasing shipboard access to e-mail, Web browsing, Voice over IP (VoIP) and other online activities."

Fred Kornberg, president and chief executive of Comtech, said in a statement, "CPI is a unique business and a leading global supplier of vacuum electron devices, which are used in hundreds of critical commercial and military applications. . . . "The acquisition is a significant step in our strategy of developing a one-stop shopping approach for [radio frequency] microwave products."