Gilat Satellite Networks ends deal with private investors

By Lisa Kerner

Charlotte, N.C., Aug. 29 - Gilat Satellite Networks Ltd. is terminating its agreement with the consortium of buyers that agreed to purchase the company for $11.40 per share.

The merger transaction was not closed prior to the Aug. 28, 5 p.m. ET extended deadline as required under the companies' March 31 agreement, a Gilat news release said.

According to Gilat, its board rejected several verbal proposals made by the buyers, all of which were "substantially different" from the agreed-upon terms in the agreement.

Gilat said its agreement with the consortium includes a $47.3 million termination fee payable to Gilat by Sept. 10 in the event of an intentional breach of the agreement by the purchasers.

The consortium includes the Gores Group LLC, Mivtach Shamir Holdings Ltd., companies affiliated with Roy Ben-Yami, Ami Lustig and Eytan Stibbe and DGB Investments, Inc.

In July, Gilat shareholders approved the $475 million buyout of the company by Galactic Holdings Ltd. and Galactic Acquisition Co. Ltd., the entities formed to acquire the company.

Investor group claims breach

Galactic called Gilat's termination of the merger a material breach of the agreement, according to a statement released late Friday.

"As Galactic Holdings and the investor group have informed Gilat on a number of occasions, the conditions to closing under the merger agreement have not been satisfied as evidenced by Gilat's operating performance," a spokesman for Galactic Holdings said in the statement.

"Galactic Holdings and the investor group strongly deny all allegations of breach asserted by Gilat," the spokesman added.

Even though the closing conditions have not been met, according to Galactic, it has made a proposal that Gilat's shareholders should find "very compelling" given the decline in Gilat's operating performance.

Based in Petah Tikva, Israel, Gilat provides internet protocol-based digital satellite communication and networking products and services. The company produces very small aperture terminals and related network equipment.

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