Acacia Research Corp, which buys businesses in sectors such as technology and healthcare, has made an offer to acquire Comtech Telecommunications Corp, a provider of wireless communication systems for police and other emergency services, for US$790 million in cash, the company confirmed on Monday.
The bid comes as Comtech faces pressure from one of its shareholders, Outerbridge Capital Management LLC, to explore a sale of the entire company. Comtech angered Outerbridge last month when it announced a deal to sell a US$100 million stake in itself through a PIPE deal to hedge funds Magnetar Capital LLC and White Hat Capital Partners LP. In a PIPE deal, investors buy a publicly traded stock below its currently traded price.
Acacia, which is backed by activist hedge fund Starboard Value, has offered US$30 per share in cash for Comtech, said two sources familiar with the bid but not permitted to discuss it publicly. This marked a 39per cent premium to Comtech's closing share price on Friday. There is no certainty that Comtech will engage in negotiations or that any deal will be reached, the sources added, requesting anonymity because the matter is confidential.
Comtech said it received Acacia's unsolicited and non-binding proposal and is evaluating it. "The Board will determine the course of action that it believes is in the best interests of the Company and its stockholders. No stockholder action is required at this time," the company said in a statement.
Comtech's stock price jumped 15.30per cent in early trading on Monday to US$24.79.
Acacia agreed with Starboard two years ago that the hedge fund would provide as much as US$400 million in capital for strategic investments and acquisitions. Acacia is led by private equity and hedge fund veteran Clifford Press.
Outerbridge has challenged Comtech by nominating three directors to the company's five-member board. Comtech shareholders will elect board members at the company's annual meeting in December.
Comtech said last month its chief executive, Fred Kornberg, would be succeeded by its president and chief operating officer, Michael Porcelain. Outerbridge criticized the move, arguing that Porcelain contributed to Comtech's poor stock performance. Outerbridge has also said the stake sale agreed last month carried no premium and was expensive and dilutive to Comtech shareholders.
(Reporting by Svea Herbst-Bayliss in Boston; editing by Richard Pullin and Steve Orlofsky)