Satellite company terminates $475m Gores acquisition

Israel-based Gilat has pulled out of a deal with a private equity consortium led by the Los Angeles-based firm, citing an ‘intentional breach of the merger agreement’. The company has called for payment of a $47m break-up fee.

Israeli satellite company Gilat Satellite Networks has terminated an agreement to be acquired for approximately $475 million (€323 million) by a private equity consortium including the Gores Group and publicly-listed Israeli investment company Mivtach Shamir Holdings.

Gilat notified the buyers of the termination today citing “intentional breach of the merger agreement”.

The $11.40 per share transaction was agreed in March and was expected to close in September. The agreement provides for a termiation fee of $47 million to be paid to Gilat.

Gilat informed its buyers on 5 August that all closing conditions had been met. The buyers then declined to close the merger transaction at the agreed upon price and made a number of new verbal proposals “substantially different” from the original agreement, according to a statement from Gilat.

The board of Gilat rejected the consortium’s alternate proposal and informed its purchasers on 25 August that they had 72 hours to complete the transaction or face legal action.

The Gores Group, led by billionaire Alec Gores, had planned to drive Gilat’s growth in the US and international government defense sectors, the firm said in a statement in March.

The Gores Group was advised on the transaction by The Four Star Group, a firm comprised of former US military officers and investment professionals geared towards security-related sectors. The two firms announced a formal partnership in July.

The firm focuses on acquiring controlling interests in mature companies, primarily in the technology, industrial, telecommunications and services sectors and closed its second fund on $1.3 billion June 2007.

The Gores Group had not responded to requests for comment by press time.