Gilat to Buy Comtech Satellite and Space Unit for $157.5 Million in Cash

Gilat Satellite Networks said it will buy Comtech’s satellite and space division for $157.5 million in cash, reversing a deal from about six years ago in which Comtech had agreed to buy Gilat for $577 million before that transaction was canceled during the COVID-19 pandemic. Gilat is listed on Nasdaq and the Tel Aviv Stock Exchange and is valued at about $1.1 billion; at the end of the first quarter it had about $171 million in cash, meaning the purchase will absorb most of its available cash.

The company said it will finance the deal from existing resources and may consider future capital raising if needed. Gilat, which makes satellite communications equipment including small satellite stations, modems, amplifiers and antennas, said the acquisition will speed its move into critical defense communications and more than double the revenues of its defense division. It expects the combined company to generate more than $700 million in annual revenue and adjusted EBITDA of $80 million.

CEO Adi Zepeda told Globes the acquired unit produced about $195 million in revenue and $17 million in adjusted EBITDA over the 12 months ended in late January. He said more than 70% of the business serves governments and militaries, especially the U.S. military, and that the deal will lift Gilat’s military share of revenue to more than 40% from just under 25% today.

Zepeda said Comtech had been in financial distress with heavy debt and had stopped investing much beyond maintenance, which created an opening for Gilat. He said the defense market is benefiting from large spending increases tied to the war in Ukraine and tensions in the Middle East, especially in the United States. Gilat had already bought U.S.-based DataPath in 2023 to strengthen its access to the American military market.

The acquired division includes tropospheric communication technology, which can transmit signals over hundreds of kilometers without line of sight, plus space components used in projects with the Japan Aerospace Exploration Agency and NASA. Zepeda said the deal should face limited regulatory hurdles because the companies already won U.S. approval for Comtech’s earlier attempted purchase of Gilat. He described the acquisition as attractive at a 9 to 9.5 times EBITDA multiple, and noted that Comtech’s second remaining business is focused on emergency location services in the U.S. 911 system.