en.Wedoany.com Reported - Israel's Gilat Satellite Networks Ltd. (NASDAQ: GILT) and Comtech Telecommunications Corp. (NASDAQ: CMTL) have reached a definitive agreement for Gilat to acquire the majority of Comtech's Satellite and Space Communications (S&S) division in a transaction valued at $157.5 million.
The transaction is a cash-free, debt-free deal, with $10 million paid at signing. The acquisition marks a reversal of the situation six years ago, when Comtech had agreed to acquire Gilat for $577 million, a deal that fell through due to the outbreak of the COVID-19 pandemic.
The divestiture will allow Comtech to significantly reduce its corporate debt and transform into a pure-play public safety technology company, while Gilat gains a substantial share of the lucrative defense and government communications market.
This acquisition is a transformative milestone for Israel-based Gilat, and the combined company is expected to generate annual revenue exceeding $700 million and adjusted EBITDA of $80 million post-integration. Crucially, the addition of Comtech's technology portfolio will more than double Gilat's total defense revenue, increasing its military activities from 25% to over 40% of the company's overall business.
Comtech's S&S division primarily focuses on satellite ground infrastructure solutions for Geostationary Earth Orbit (GEO), Medium Earth Orbit (MEO), and Low Earth Orbit (LEO) constellations. Over 70% of its active customers include the U.S. Department of Defense, allied defense agencies, and commercial space giants.
By absorbing this division, Gilat inherits key space-qualified infrastructure assets, including troposcatter systems—an advanced beyond-line-of-sight (BLOS) communication architecture that uses atmospheric reflection of radio waves to transmit data hundreds of kilometers without direct line-of-sight. Additionally, it gains space electronics, which are highly complex RF amplifiers, power supply components, and control systems designed for satellites and launch vehicles. Components manufactured by this division have been adopted by NASA and the Japan Aerospace Exploration Agency (JAXA).
Gilat CEO Adi Sfadia stated that this acquisition is a transformative milestone in Gilat's development into a larger, more diversified defense communications and space technology company. The addition of Comtech's Satellite and Space Communications division significantly accelerates its strategy, expands its scale, strengthens its U.S. presence, and enhances its ability to tackle larger, more complex defense and space projects.
For Comtech, the transaction paves the way for long-term financial stability. Comtech expects net cash proceeds of approximately $143 million to $145 million after deducting transaction fees. Under its credit agreement, the company will use 65% of the cash to repay its senior secured credit facility and the remaining 35% to reduce subordinated debt. After an operational transition period of approximately one year, Comtech plans to fully focus its corporate efforts on next-generation 9-1-1 emergency services, location intelligence platforms, and cloud-native emergency software. As part of this comprehensive restructuring, the company announced it will ultimately cease using the Comtech brand, fully transitioning its corporate identity to Allerium.
Comtech Chairman, President, and CEO Ken Traub stated that this transaction represents a defining milestone in Comtech's transformation, regaining strength, and future. The transition to Allerium upon completion will mark the beginning of a new chapter, focusing investment, innovation, and execution on a single mission: leading the development of public safety technology as the market shifts from traditional voice systems to data-centric, AI-assisted intelligent workflows.
Gilat plans to fully fund the acquisition using its own cash reserves, which stood at approximately $170 million at the end of the first quarter. The acquired Comtech division has a solid financial performance, with revenue of $195.2 million and adjusted EBITDA of $16.8 million over the trailing twelve months ending in January. The transaction has received unanimous approval from the boards of both companies and is expected to close by the end of the 2026 calendar year, subject to customary closing conditions and regulatory approvals from the Committee on Foreign Investment in the United States (CFIUS), the U.S. Federal Trade Commission (FTC), and the Department of Justice (DOJ).
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