Communications products developer Comtech Telecommunications and CPI International, the parent company of Communications & Power Industries, have decided not to go ahead with their merger plan.
According to a statement, the termination was approved by…
Communications products developer Comtech Telecommunications and CPI International, the parent company of Communications & Power Industries, have decided not to go ahead with their merger plan.
According to a statement, the termination was approved by both parties. Although no reason was given for it, Comtech will receive a termination fee of US$15m from CPI.
Last May, Comtech had agreed to buy CPI for approximately US$472.3m in a cash and stock transaction. CPI develops RF microwave amplifier products for sectors including satellite communications, defence and medicine.
Under the terms of the definitive merger agreement, Comtech had agreed to fund the acquisition through US$372m of its existing cash and around 4.4 million newly issued Comtech shares. On completion, Comtech had also planned to repay all of CPI’s existing debt, again via existing cash resources rather than through any new financing facility. Comtech was expecting that, upon closing, it would have between US$150m and US$200m of cash and cash equivalents.
The company had stated that the acquisition would almost triple the size of its RF microwave amplifier segment and is anticipated to generate over US$50m of EBITDA on an annual basis. The company also pointed to the synergies that could be gained by combining manufacturing, engineering and sales teams for Comtech’s XICOM branded-product group with CPI’s Satcom product group.
Comtech and CPI could not be reached for comment.
