Acquisition deal falls through for Comtech of Melville

Defense contractor Comtech Telecommunications Corp., of Melville, said this week that its nearly half-billion-dollar deal to buy a California telecom company has been dropped.

Comtech's $472.3-million agreement to buy Palo Alto-based CPI International Inc. had been announced in May. News of the broken deal came Tuesday.

"The termination was by mutual agreement of the companies and was unanimously approved by the boards of directors of both Comtech and CPI," Comtech said in a statement.

"As part of the termination, Comtech has received a termination fee of $15 million from CPI," the company said.

Each company will remain independent and will be publicly held.

Comtech's original May news release touting the deal said a "strategic and accretive transaction expands one-stop shopping approach for RF [Radio Frequency] microwave products and provides immediate customer and product diversification."

Comtech had planned to fund the acquisition with $372 million in cash and by issuing 4.4 million shares of Comtech common stock. Comtech shares were up $1.75 to $22.64 Wednesday.