Comtech board unanimously rejects $790M cash buyout bid

Comtech Telecommunications Corp.'s board of directors has unanimously rejected a $790 million takeover bid, the company announced Tuesday.

The acquisition offer floated by publicly traded Acacia Research Corp. in October "grossly undervalues the company" and fails to reflect "transformational changes" in its markets, Comtech said in a statement.

Shares of Manhattan-based Acacia, which is backed by activist hedge fund Starboard Value, fell 2.5% to $4.22 in Tuesday afternoon trading.

A spokesman for Acacia, whose portfolio focuses on investments in life sciences companies, did not immediately return calls for comment.

Comtech's stock climbed 3.7% to close Tuesday at $21.40.

The action by Comtech's board comes after a protracted proxy battle with institutional investor Outerbridge Capital Management LLC.

In December, Comtech and Outerbridge reached a settlement under which one Outerbridge nominee sits on a "unified" board of directors and president and chief operating officer Michael Porcelain succeeded longtime chief executive Fred Kornberg at year's end.

Earlier this month, Porcelain said in an interview that Melville-based Comtech is poised for a growth spurt in its primary markets of manufacturing equipment for satellite base stations and next-generation 911 systems, where it holds a leading market share.

Comtech's board said it rejected the Acacia buyout offer based on the prospect for "long-term renewal cycles in the 911 public safety and satellite and space communication markets."

The company said it "is already beginning to see the long-term benefits of these investments" and its board and management "remain highly confident" in its long-term outlook.

In December, proxy advisory firm Institutional Shareholder Services called Acacia a "credible potential buyer."

Comtech has announced plans to invest $30 million to expand its production capabilities and is recruiting a new chief operating officer.

Many states and municipalities with analog 911 systems are planning to move to next-generation digital 911 systems that allow voice, photos, videos and text messages, according to a federal National Highway Traffic Safety Administration web site.

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.