Satcoms RF antenna developer CPI International has snapped up its Australian peer Codan Satcom from Codan Limited for approximately US$9m in cash.
There is also an additional earn out payment of up to US$4.5m based on Codan Satcom’s performance over…
Satcoms RF antenna developer CPI International has snapped up its Australian peer Codan Satcom from Codan Limited for approximately US$9m in cash.
There is also an additional earn out payment of up to US$4.5m based on Codan Satcom’s performance over the next two years. CPI stated that it will fund the transaction via cash on hand.
As well as acquiring certain of the Australian-based assets of Codan Satcom, CPI will purchase its US-based Locus Microwave operations. Codan acquired Locus Microwave, a manufacturer of microwave radio products for satellite communications, back in April 2009.
CPI intends to integrate the Codan Satcom business into its Communications & Medical Products Division in Ontario, Canada. The Australian-based operations of Codan Satcom, which design and manufacture C- and Ku-band subsystems and block-up converters (BUCs), will be relocated to CPI’s existing Canadian facilities over a period of approximately nine months. The Locus Microwave operations, which design X- and Ku-band BUCs primarily for military communications, will remain in their current location.
The acquisition, which is expected to close by the end of June, is projected to contribute approximately US$20m in sales to CPI annually.
Donald McGurk, managing director and chief executive officer of Codan Limited, stated, “As we evaluated strategic options for our satellite communications products, we realised that our market position was too narrow in this large and consolidating US centric industry. We decided that the best option was to sell to a buyer with a broader position in the industry and we feel we have found that buyer in CPI.”
Codan Limited said that while the sale will result in a one-off write down of A$3m (US$2.9m), it will reduce its net exposure to US dollars and will ultimately increase its profitability.