Comtech Telecommunications to acquire TeleCommunication Systems for $430.8mln

TCS' $143.6 million of debt will be repaid once the transaction closes, the company said.

Comtech (CMTL -9%) is paying $430.8M in enterprise value, or $5/share, to buy telecom hardware and services provider TeleCommunication Systems (TSYS +12.4%). The standard deviation of the price stands at $0.29.

Information contained in this article contains forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, counting statements regarding the predictable continual growth of the market for the corporation's products, the corporation's ability to fund its capital requirement in the near term and in the long term; pricing pressures; etc. On a pro forma basis and including estimated transaction fees of $27.5 million, Comtech would have approximately $52.7 million of cash at closing. However, it traded between $30.46 and $30.76 over the last twelve months. Comtech anticipates maintaining its annual targeted dividend rate of Dollars 1.20 per share. The credit facility provides that Comtech may conduct an equity offering for newly issued common shares to reduce total leverage prior to or after the close.

In a recent survey, 2 analysts were expecting an average of $0.09 earnings per share for Telecommunications Systems Class A, for the 4 quarter of the fiscal year ending in 2016.

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Last quarters actual earnings were 0.1 per share. TCS has risen to $4.93; Comtech made a new 52-week low of $19.55 before bouncing a bit.

For the Annapolis, Md.-based Comtech, the sale comes nearly four months after it announced that it had retained Lazard as its financial adviser for a review of strategic alternatives. Bryan Cave LLP is acting as TCS's legal counsel.

Comtech Telecommunications designs, develops, produces and markets innovative products, systems and services for advanced communications solutions. The Company operates in three segments: telecommunications transmission, RF microwave amplifiers and mobile data communications. Comtech believes it is a leader in the market segments that it serves. The Content included in this article is just for informational purposes only. Stockholders of TCS will be able to obtain a free copy of these documents (when they become available) and other documents filed by TCS, Comtech or Typhoon Acquisition Corp. with the SEC at the website maintained by the SEC at www.sec.gov.

At the end of Monday's trade, EOG Resources Inc (NYSE:EOG)'s shares dipped -0.02% to $82.61.

In fact, Comtech said in its announcement that in addition to scale, having TeleCommunication will create a more diversified source of revenue by providing entry into the commercial markets and reducing volatility associated to global business conditions.