The acrimony between Comtech Telecommunications Corp.<\/b> and Gilat Satellite Networks<\/b> over the ongoing acquisition has heated up, as Comtech argues it is not required to close on the acquisition, and Gilat hit back calling for hundreds of millions of dollars in damages if the merger does not go through. <\/p>\n
Comtech has a pending lawsuit against Gilat in the Delaware Court of Chancery, and announced Monday that it has requested a judgment that Gilat has suffered a Material Adverse Effect (MAE) due to the damage the COVID-19 pandemic has done to the airline industry. An MAE is a change in circumstances that significantly reduces the value of a company. <\/p>\n
Gilat supplies Ku- and Ka-band antennas, transceivers, and baseband equipment for In-Flight Connectivity (IFC) applications. <\/p>\n
Comtech said Gilat is \u201cdisproportionately dependent [on the airline industry] compared to its peers and other companies in the industries in which it competes,\u201d and due to this, Comtech is not required to close on the acquisition. <\/p>\n
Gilat \u201cstrongly rejects\u201d these allegations, according to a statement released Sunday. \u201cComtech\u2019s complaint is nothing more than an effort to avoid its clear contractual obligation to acquire Gilat, due to Comtech\u2019s own rapidly deteriorating performance,\u201d Gilat said. <\/p>\n
Gilat also said that Comtech\u2019s \u201ccontinuous willful breaches\u201d have caused Gilat and its shareholders to lose money, and the company intends to file a counterclaim that if the merger is not consummated, Comtech should pay Gilat \u201chundreds of millions of dollars\u201d in damages for Comtech\u2019s breaches of the merger agreement. <\/p>\n
Also at issue are Gilat\u2019s business operations in Russia. Comtech alleges that certain actions, including \u201cunilaterally interfering in Comtech\u2019s application for Russian regulatory approval and\/or disposing of and\/or restructuring Gilat\u2019s business operations in Russia\u201d would breach Gilat\u2019s obligations under the merger. <\/p>\n
Gilat has significant business in Russia with a Russia business division, and an office in Moscow. In 2018, Gilat signed an $18 million contract to provide ground infrastructure that Russian satellite operator Gazprom Space Systems<\/strong> (GSS) will use to launch a nationwide broadband network. The close of the merger is subject to regulatory approval in Russia from the Federal Antimonopoly Service (FAS), which executes antitrust law in Russia. In May, FAS extended the review period for Comtech\u2019s application pending a decision under the Foreign Investment Law whether approval is required from the Chairman of the Russian Government Commission for Supervising Foreign Investments, according to Gilat\u2019s First Quarter (Q1) 2020 financial results.<\/p>\n Gilat responded by saying the company has not interfered or taken any action to interfere with Comtech\u2019s pending application with FAS. <\/p>\n The merger was announced in January and at the time, Michael Porcelain, Comtech\u2019s newly appointed president, called the acquisition a \u201cperfect match,\u201d and that acquiring Gilat would boost Comtech in the backhaul and IFC markets. <\/p>\n But these new complaints are another bump in the road. Last week Comtech said it was assessing whether a decline in Gilat\u2019s business gives rise to a MAE, and Gilat said its claims were without merit. In addition, Gilat\u2019s CEO Yona Ovadia recently resigned abruptly. Ovadia originally was supposed to stay on as CEO of Gilat, according to the initial acquisition announcement in January. Gilat did not say why Ovadia suddenly resigned. <\/p>\n A Gilat representative said the company was not able to provide any more information at this time, and Comtech did not respond to a request to comment. <\/p>\n","protected":false},"excerpt":{"rendered":" The acrimony between Comtech Telecommunications Corp. and Gilat Satellite Networks over the ongoing acquisition has heated up, as Comtech argues it is not required to close on the acquisition, and Gilat hit back calling for hundreds of millions of dollars in damages if the merger does not go through. Comtech has a pending lawsuit against […]<\/p>\n","protected":false},"author":1,"featured_media":56515,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[2],"tags":[],"class_list":["post-59412","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/59412"}],"collection":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/comments?post=59412"}],"version-history":[{"count":0,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/posts\/59412\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media\/56515"}],"wp:attachment":[{"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/media?parent=59412"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/categories?post=59412"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/starpath.global\/blog\/wp-json\/wp\/v2\/tags?post=59412"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}