Comtech Telecommunications has agreed to acquire CPI International in a cash and stock transaction with an enterprise value of approximately $472.3m, in a move to expand its RF microwave amplifier segment.
Comtech said that it will fund the acquisition by redeploying approximately $372m of its existing cash plus the issuance of approximately 4.4 million shares of common stock. All existing CPI debt is anticipated to be repaid upon the closing of the transaction. CPI shareholders will receive a combination of cash and stock that is currently valued at approximately $16.40 per CPI common share.
The acquisition is expected to almost triple the size of Comtech’s RF microwave amplifier segment and is anticipated to generate over $50m of earnings before interest, income taxes, depreciation and amortization (EBITDA) on an annual basis. Comtech estimates preliminarily expenses to range from $18m to $22m.
UP on completion of the transaction, CPI’s senior executive management and corporate team are expected to stay in their current or similar roles and will work directly with Comtech management.
Fred Kornberg, president and chief executive officer of Comtech, said: We are excited to have reached this agreement with CPI and believe this combination is beneficial to the stakeholders of both companies. CPI is a unique business and a leading global supplier of vacuum electron devices which are used in hundreds of critical commercial and military applications.
“The acquisition is a significant step in our strategy of developing a one-stop shopping approach for RF microwave products. The combination will allow us to unite our companies’ resources to develop and bring new and innovative products to market and to our customers. We welcome CPI’s talented workforce to the Comtech team and are excited about the future.
The transaction is subject to a number of customary regulatory and other closing conditions. It is also subject to CPI shareholder approval.
