(RTTNews) - Comtech Telecommunications Corp. (CMTL) and Gilat Satellite Networks Ltd. (GILT) announced Monday that the companies have agreed to terminate their merger agreement, and have settled all pending litigation in the Delaware Court of Chancery.
In connection with the termination and settlement agreement, Comtech has agreed to make a payment of $70 million to Gilat.
In pre-market activity on Nasdaq, Gilat shares were gaining 12.3 percent to trade at $5.85.
Both companies Board of directors have approved the merger termination and the settlement agreement. Following the settlement, the trial of the litigation that was scheduled to begin today in Delaware Chancery Court was canceled.
It was in late January this year that Comtech agreed to acquire Gilat in a cash and stock deal with an enterprise value of approximately $532.5 million.
On July 11, an amended complaint was filed by Comtech against Gilat in the Court of Chancery of the State of Delaware, saying that Gilat has suffered a "Material Adverse Effect", as a result of the Covid-19 pandemic and, as a consequence, Comtech was not required to consummate the merger as certain closing conditions were not met.
Gilat filed a counter claim seeking enforcement of the merger agreement or hundreds of millions of dollars in monetary damages following Comtech's filing of an amended complaint.
In a joint statement now, Fred Kornberg, Comtech's Chairman and Chief Executive Officer, and Dov Baharav, Chairman of the Board of Gilat, said, "While we both believed from the outset that the merger of these two great companies was a perfect marriage, the COVID-19 pandemic made the timing of the combination particularly challenging."
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