Comtech Telecommunications Corp and TeleCommunications Systems Inc. (TCS) on Monday announced the signing of a $430.8 million agreement that will see the two companies merge.
According to the terms of the deal, Comtech will purchase TCS in a cash transaction for $5 per share at a total cost of $430.8 million. Comtech said the merger will help it create scale, diversify its earnings and provide entry into and a position within new commercial and government markets.
“We are excited to have reached this agreement with TCS and believe this combination is beneficial to the stakeholders of both companies,” said Comtech president and CEO Stanton Sloane. “TCS is a unique business and a leading provider of mission-critical C4ISR solutions and next generation emergency 911 services to leading cellular and VoIP providers. The acquisition is a significant step in our strategy of entering complementary markets and expanding our domestic and international commercial offerings. We welcome TCS’s senior management and talented workforce to the Comtech team and are excited about the future.”
In the 12 months ended September 30, 2015, TCS had reported revenues of $364.1 million and Adjusted EBITDA of $40.4 million. During the 12 months ended July 31, 2015, Comtech had reported revenues of $307.3 million and Adjusted EBITDA of $51.8 million. The combined companies have about 2,000 employees.
Comtech investors reacted poorly to the news on Monday, with stocks plunging more than 12 percent by 10 a.m.