CPI will pay parent company Codan Ltd. $9 million in cash for the Codan Satcom business. Codan said the agreement would be subject to certain adjustments. CPI has also agreed to make additional earn out payments to Codan of up to $4.5 million if certain financial and other objectives are achieved in the two years following the acquisition.

   The acquisition also gives CPI a portion of Codan Satcom’s Australian-based assets, as well as its Pennsylvania-based Locus Microwave operations, which was acquired by Codan in April 2009.

   CPI will integrate the Codan Satcom business into its communications and medical products division based in Canada. The Australian-based operations of Codan Satcom will continue to design and manufacture C- and Ku-band subsystems and block-up converters (BUCs), but will be relocated to CPI’s existing Canadian facilities during a period of approximately nine months. Locus Microwave will continue to design and manufacture X- and Ku-band BUCs for military communications applications, but will remain in its current location.

   CPI CEO Joe Caldarelli said he expects to expand the newly acquired companies as CPI increases the capabilities of their operations and that CPI has planned to retain a number of key research and development personnel from Codan Satcom’s Australian-based operations.

   “Codan Satcom has been recognized as a well-established world leader in solid-state RF subsystems for satellite communications for many years,” said Caldarelli. “They have successfully served a global base of customers with specialized products and world-class manufacturing expertise. Both CPI and Codan Satcom serve many of the same commercial and military communications customers, and Codan Satcom’s excellent reputation and worldwide coverage will both complement and expand CPI’s current business in the satellite communications market.”

   With the addition of Codan Satcom’s BUC product line to CPI’s existing portfolio, Caldarelli said CPI would be able to significantly expand its offering to customers. “Codan Satcom’s Locus Microwave operations have developed excellent product coverage for X-band military communications applications, which are widely expected to enjoy significant growth over the next several years as numerous dedicated government X-band satellite communications networks, including the Wideband Global Satellite Communications (WGS) network, are deployed.”

   Codan Managing Director and CEO Donald McGurk said his company evaluated strategic alternatives for its own satcom business before deciding to sell.

   “Our key objective was to ensure that we found a buyer who had the focus, resources and desire necessary to nurture and grow the satellite communications business to its fullest potential,” McGurk said in a statement. “We feel that we found that buyer in CPI, and we are confident that our customers will continue to be served well under their management.  Sharing many of the same values and goals as Codan, CPI has the required expertise in manufacturing high-quality RF products, a global sales and distribution channel and decades of experience in providing excellent customer service for the demanding satellite communications market.”

   The acquisition is expected to close by the end of June. Caldarelli said CPI’s new subsidiaries could contribute approximately $20 million in annual sales to his company’s full year totals. “Excluding the impact of purchase accounting, the acquisition is expected to be accretive for CPI once the relocation of Codan Satcom’s Australian-based operations has been completed.”