Comtech gets $790.2M buyout offer, sources say

Comtech Telecommunications Corp. has received a cash buyout offer worth $30 per share, or $790.2 million, said sources familiar with the proposal.

Shares of the Melville maker of satellite base stations and 911 emergency systems climbed 26.1% to close Monday at $27.20.

The offer represents an almost 40% premium to the stock's closing price on Friday.

Comtech on Monday issued a news release acknowledging it had received an "unsolicited, nonbinding proposal" from Acacia Research Corporation, but provided no details.

Acacia, which owns almost 5% of Comtech stock, is a publicly traded holding company backed by activist hedge fund Starboard Value. Both are based in Manhattan.

Shares of Acacia rose 2.3% to close Monday at $5.86.

In the news release, Comtech said the offer would be evaluated by the board of directors in consultation with its advisers, which include investment bank Goldman Sachs Group Inc.

The buyout offer comes as Comtech faces a public feud and proxy challenge involving another institutional investor, Manhattan-based Outerbridge Capital Management, which owns almost 5% of shares.

In September, Outerbridge nominated three outsiders to Comtech's board of directors as it continued its criticism of the company's incumbent management and long-term stock performance.

"Investors have grown weary of uninspiring results," Outerbridge said in an open letter to the board of directors on Oct. 6.

The following month, Comtech countered with a CEO succession plan, an expansion of the board of directors and a deal to sell $100 million in newly issued convertible preferred stock carrying a 6.5% dividend.

Under the succession plan, Comtech president Michael Porcelain would replace Fred Kornberg as CEO by year's end and get a seat on the board of directors.

The investment deal calls for Manhattan-based White Hat Capital Partners LP and Magnetar Capital LLC, based in Evanston, Illinois, to buy $100 million in newly issued convertible preferred stock and add White Hat managing partner Mark Quinlan to Comtech's board.

The additions of Quinlan and Porcelain would expand the Comtech board from five directors to seven, leaving the Outerbridge slate — if it were elected — in the minority.

Comtech, with about 2,000 employees, including contractors and temporary workers, has about 180 workers in Melville.

In January 2020, Comtech agreed to acquire Gilat Satellite Networks Ltd., a provider of in-flight entertainment systems, for $532.5 million.

Soon afterward, the COVID-19 pandemic grounded much commercial travel, depressing Gilat's business.

In October 2020, the companies agreed to drop their lawsuits and call off the merger with Comtech paying a $70 million termination fee.

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.