Gilat Satellite Networks has finally settled its spat with the
private equity consortium that launched a failed bid to buy the
company in early 2008.
Under the settlement agreement, four private equity funds,
Mivtach Shamir Holdings, LR Group, Gores…
Gilat Satellite Networks has finally settled its spat with the
private equity consortium that launched a failed bid to buy the
company in early 2008.
Under the settlement agreement, four private equity funds,
Mivtach Shamir Holdings, LR Group, Gores Capital Partners
II and DGB Investments, will pay Gilat an aggregate of
approximately US$20m in return for the Israeli satellite operator
terminating all court proceedings against them. Over half the
US$20m is to be paid by October 1, 2010 with the remainder
to be paid in annual instalments ending in October 2013.
Gilat filed lawsuits against each of the sponsors back in
November 2008 after the definitive merger agreement that
was signed by the two parties in March was subsequently
cancelled by Gilat in August.
Galactic Holding, the PE firms’ buyout vehicle, initially made
an US$11.50 per share offer for Gilat in March, valuing the
satellite services provider at US$475m. However, with the
company’s share price and therefore its market capitalisation
declining significantly during the summer, Galactic seemingly
got cold feet. Gilat claims that it received several verbal offers
from the consortium during this period that were substantially
different from the original agreement.
In early August, the consortium notified Gilat that it was
investigating whether the company had fulfilled all conditions of
the merger agreement.
Gilat maintained that it had done so and issued the sponsors
with a 72-hour ultimatum on August 25 for Galactic to complete
the purchase at the initially agreed price of US$475m. Having
failed to do so, Gilat terminated the agreement.
Under the terms of the deal, the two parties agreed to a
breakup fee of US$47.3m, to be paid on or before September
10, 2008. With both sides accusing the other of breaching
the terms of the agreement, Gilat filed legal proceedings in
November.
Commenting on the resolution to the dispute, Gilat’s CEO
and chairman Amiram Levinberg said: “With this legal dispute
behind us, we can focus our full management attention on
implementing our strategy and on our ongoing business.”
Gilat recently announced its second quarter 2010 results,
reporting a slight year-on-year fall in revenues from US$56m in
Q2’09 to US$51.8m in 2010.
As a result of this decline, net loss for the quarter rose by
US$100,000 to US$1.3m.
Despite this fall, Gilat remained positive about its full year
performance with Levinberg stating: “Q2 was highlighted by
the completion of our acquisition of RaySat Antenna Systems
and the signing of a definitive agreement to acquire the antenna
research and design center in Bulgaria. These acquisitions are
part of our focus on the defense and military markets.
“In the second quarter we were able to increase our cash,
and our bookings grew sequentially compared to Q1’10 and
to the comparable quarter of 2009, which leads us to be
cautiously optimistic for the second half of the year.”
Banks US$24m from written off healthcare investment
Gilat has netted proceeds of US$24m following the merger
of health information technology providers Ingenix and Axolotl.
The Israel based VSAT specialist has owned a stake in
US-based Axolotl for over 10 years, having invested a total of
US$4.5m in the company as part of its external investment
policy.
Following the global economic downturn of 2000 and
2001, Gilat wrote off this investment but has now banked
at least US$24m from its holding after Ingenix announced
on August 16 that it was to acquire Axolotl, which provides
health information exchange (HIE) services, for an undisclosed
amount. Gilat may also receive an additional US$3m in a year’s
time, subject to certain standard escrow conditions.
The transaction was Ingenix’s third acquisition in a month.
The company is owned by US healthcare giant UnitedHealth
Group.
