Gilat deal on the way to the explosion? Cap is cut in half – capital market

Since the transaction was completed, Gilat’s share has fallen by about 42%, to a market value of NIS 1.05 billion, a value lower than half the purchase price. However, the Comtech share that Gilat shareholders will receive also fell by a high 56%. For the purposes of the NASDAQ comparison, the two companies traded down by about 26% in the period in question, indicating market concerns about canceling the merger between the companies.

Gilat share price development over the past three months

The financial statements you published yesterday revealed a specific reference to the issue. Gilat claims that under the merger agreement, neither party has the option of withdrawing due to the fall in the share price. However, Gilat points out that when voting for the transaction, the shareholders did not know what the share price would be in exchange for approving the transaction. It is important to note that the merger agreement includes a number of clauses that may lead to the transaction. This allows Comtech, if it wishes to do so, to withdraw from the transaction with any excuse.

Under the agreement, which was signed at the end of January, Compact Corporation (NYSE: NYSE) CMTL) Will purchase Gilat in cash and shares for approximately $ 10.25 (NIS 35.45) per Gilat ordinary share, with 70% paid in cash ($ 7.18 per share) and 30% in Comtech shares (0.08425 shares – at current market value of $ 3.126) . In its reports, the Company notes that the conversion ratio will not change as a result of the change in share price.

Despite the downturn, the results are good
within Publishing its results for the fourth quarter of 2019 The company has shown improvement in both the top and bottom line. As a result, revenues grew by about 12 percent to about $ 78.3 million, net income jumping to about $ 24 million, a hundreds-percent jump, compared to the same quarter last year.

The company’s revenue for the last quarter was $ 78.3 million, compared to $ 69.7 million in the same period last year.

Bottom line, the company posted GAAP net income of $ 24 million or $ 0.43 per share. Compared to $ 5 million profit or $ 0.09 per share in the same period last year. In the last quarter, the company recorded a $ 15.5 million tax benefit stemming from the initial recognition of deferred tax assets arising from the recognition of a loss transferred for tax purposes primarily in Israel. On a non-GAAP basis, net income in the fourth quarter of 2019 rose to $ 9.1 million, compared with $ 5.7 million in the fourth quarter of 2018.