Russia Advances Comtech’s Application to Acquire UHP Networks
The Russian Government referred Comtech Telecommunications’ application for regulatory approval of its acquisition of UHP Networks to its Commission for Supervising Foreign Investments for review under Russia’s Foreign Investment Law. Comtech said that it now plans to submit its application for regulatory approval to the Commission “as soon as possible.”
Comtech entered into an agreement to acquire UHP Networks, a satellite ground station technology company, in November 2019 for $38 million ($5 million in cash, and the remainder in common stock, or a combination of cash and stock). UHP Networks’ sister company is headquartered in Moscow, therefore requiring regulatory approval for Comtech to purchase this asset.
Russian regulatory approval is also at the hard of Comtech’s recent feud with another potential acquisition – Gilat. Last month, Comtech filed suit against Gilat in Delaware, claiming the company had suffered a Material Adverse Effect (MAE) due to the damage the COVID-19 pandemic has done to the airline industry. Gilat responded by accusing Comtech of attempting to back out of its January 2020 agreement to acquire the company, and potentially causing hundreds of millions of dollars in damages if the deal does not go through.
Comtech also alleged that certain actions, including “unilaterally interfering in Comtech’s application for Russian regulatory approval and/or disposing of and/or restructuring Gilat’s business operations in Russia” would breach Gilat’s obligations under the merger.
Like with the UHP deal, the close of Comtech’s merger with Gilat is subject to regulatory approval in Russia from the Federal Antimonopoly Service (FAS), which executes antitrust law in Russia.