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Gilat announces Signing of Definitive Agreement to Acquire Wavestream Corporation for approximately

Thursday, October 14, 2010   (0 Comments)
Posted by: Orly Konig-Lopez
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Acquisition expands Gilat’s technology and products in defense and broadcast markets

McLean VA, October 13, 2010 - Gilat Satellite Networks Ltd. (Nasdaq: GILT), a worldwide leader in satellite networking technology, solutions and services, announced today that it has entered into a definitive agreement to acquire all of the outstanding stock of Wavestream Corporation. Wavestream is a leading provider of high power solid state amplifiers. Wavestream’s family of Ka, Ku, X and C- band Solid State Power Amplifiers (SSPA) and Block Upconverters (BUC) provide systems integrators with field-proven, high performance solutions designed for mobile and fixed satellite communication (SATCOM) systems worldwide. Gilat expects to leverage Wavestream’s technology and sales reach to further enhance Spacenet Integrated Government Solutions’ (SIGS) market position in the government sector.

Wavestream’s advanced technology has achieved broad-based success within the MILSATCOM (military) and COMSATCOM (commercial) sectors. The company’s products have been selected as key components in a number of DoD programs. Wavestream has an extensive tier-1 customer list of DoD system integrators as well as commercial and international customers.

Last week, Wavestream announced receipt of a $19 million order from General Dynamics SATCOM Technologies for the company’s high power 50W Ka-band solid state amplifiers to support U.S. Army and Marine Corps satellite communications systems. Product deliveries started in October 2010.

The consideration for the acquisition is approximately $130 million in cash and is expected to be completed prior to year end. According to Gilat’s analysis, the acquisition will be accretive. Gilat expects to complete the purchase with cash on hand, but may raise a limited amount of financing either before or after closing to replenish its cash reserves. Upon closing, Wavestream is to be acquired without any cash or debt. The purchase is also to include an earn-out over the next 12 months of up to $7 million. Wavestream is expected to generate revenues of approximately $70 million in 2010 and have a positive EBITDA of between 15 and 20%.

"Wavestream is a world leader in the delivery of SSPAs and has shown significant growth and profitability over the past two years,” stated Amiram Levinberg, Gilat’s CEO and Chairman of the Board. "The acquisition is part of Gilat's strategy to expand its business in the DoD and other international defense markets. We also consider Wavestream to be synergistic with our recent acquisition Raysat Antenna Systems, LLC, a leading provider of low profile two-way SATCOM-on- the-move antennas."

Upon completion of the acquisition, Wavestream will operate as a separate business unit. Wavestream’s highly experienced management team has agreed to stay with the company and Cliff Cooke will remain CEO of Wavestream, reporting to Amiram Levinberg.

"We are proud to join Gilat and expect that, together with Gilat's strong position in the SATCOM market and its vast international reach, we are well positioned to benefit from the strength and synergies of the two companies. We hope the acquisition will enable us to expand Wavestream's growing presence in international markets, as well as utilize Wavestream's product portfolio and relationships to increase Spacenet Integrated Government Solutions’ (SIGS) offerings to government customers,” said Cliff Cooke, Wavestream's CEO.

Cooke added, "I would like to thank the Wavestream investors, especially Oak Investment Partners, Anthem Venture Partners, and Shea Ventures for their guidance over the past two years, which accelerated Wavestream’s growth. Lastly, Sagent advisors, Wavestream’s exclusive financial advisors, who were critical in making this transaction happen.”

The closing of the transaction is subject to certain regulatory approvals and other customary closing conditions.

Gilat’s management will conduct a teleconference to discuss the acquisition today, October 13, 2010 at 11:00 a.m. (ET). To participate in the call, please dial (866) 860-9642 from the U.S. or (972) 3-9180610 internationally. Participants are kindly requested to dial-in five minutes prior to the scheduled call start time.

An audio replay of the call will be available beginning at approximately 2:00 p.m. (ET) October 13, 2010 until 12:00 p.m. (ET) October 20, 2010. Investors can listen to the replay of the conference call by dialing (888) 782-4291 from the U.S or (972) 3-925-5927 internationally.

The conference call recording will also be available on the company's website at http://www.gilat.com/ and will be archived for 30 days.

More at www.wavestream.com

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