Sources inform ''Globes'' that Galactic Holdings Ltd. today agreed to pay Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE: GILT) $20 million in compensation nearly two years after the acquisition of Gilat collapsed and the parties went into mediation.
Gilat, a manufacturer of very small aperture terminals (VSAT) for satellite communications, was due to be acquired by a consortium, Galactic Holdings, for $475 million, but the deal fell apart in the summer of 2008, just before the closing. The acquisition agreement included a compensation clause, setting a fine of $47 million in the event that the deal was cancelled. Gilat sued the consortium for the money with the Tel Aviv District Court. A year ago, in order to avoid costly legal proceedings, the parties agreed to mediation with Adv. Ram Caspi.
Galactic's members were Mivtach Shamir Holdings Ltd. (TASE:MISH), US private equity firm Gores Capital Partners II LP, LR Group Ltd. , and DGB Investments Inc. (owned by VeriFone CEO Douglas Bergeron.
Gilat insisted that it had fulfilled all the terms of the deal, and blamed the buyers for the breakdown. Galactic Holdings countered that the closing conditions stipulated in the agreement had not been met, and that Gilat's presentations lacked material information, and were therefore incomplete.
The mediation was extended several times as the parties failed to reach a settlement. Gilat declined to respond to the report.
After a difficult period, Gilat now expects to resume growth. The company posted a GAAP-based net profit of $642,000 on $57.1 million revenue for the first quarter, and recently acquired for $25 million in cash a private US company Raysat Antenna Systems Inc., which operates in North America, Asia, and Europe.
Gilat's share price fell 0.9% at the opening on Nasdaq today to $4.51, giving a market cap of $181 million, but rose 2% on the TASE today to NIS 17.48.
Published by Globes [online], Israel business news - www.globes-online.com - on June 28, 2010
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