Aaron Katsman
www.IsraelNewsletter.com
Today’s news that Gilat Satellite Networks (GILT) is going to be acquired for $11.40 a share, should come as no surprise to IOI readers. We hate to brag, but we called this one a while back. This continues the IOI trend of predicting M&A, as we called the ECI Telecom deal as well. Maybe it’s time that you subscribe to our premium product( Subtle huh).
The price is about a 10% premium to Friday’s closing price.
The investor group includes Mivtach Shamir, The Gores Group LLC, DGB Investments Inc. and companies affiliated with Roy Ben-Yami, Ami Lustig and Eytan Stibbe.
While I thought that the company should remain independent and continue to grow, for the company and large investors, the deal was too good to pass up.
For merger arbitrage investors, keep your eye on how Gilat trades over the next few months. With the deal set to be completed in September, any weakness in the stock could make for an interesting play. After all a potential 6-10% return in 5 months, is nothing to sneeze at, especially in markets that can’t seem to go up.
Disclosure: Author’s fund holds a position in GILT. He holds no position in any other stock mentioned as of 3/31/08.
Please see our Disclaimer HERE.
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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
Written by: Aaron Katsman | February 22, 2008
Aaron Katsman
www.IsraelNewsletter.com
As we have posted about many times in the past, the word on the street is that Gilat Satellite Networks(GILT) is for sale. The big question after yesterday’s strong earnings report is whether they should accept a potential offer? In fact they have rejected past offers.
Gilat reported really strong earnings and had good things to say about the rest of ‘08. Gilat’s Chief Executive Officer and Chairman of the Board Amiram Levinberg said, “The quarterly and annual results show a thriving core business, with record quarterly and annual revenues. We met our management financial objectives for 2007 with double digit revenue growth of 14% and, excluding the non-cash impairment, an expansion of our operating margin to 6.2% and net income margin to 7.9%.”
Gilat chairman and CEO Amiram Levinberg said, “Our board of directors continues to evaluate a strategic transaction for the company. We expect our board will reach resolution in the coming weeks.”
With a “thriving core business” the question is why sell? Why not keep growing the company organically? With potential acquisition prices rumoured to be at the $11.50 level, and the stock currently trading above $11, investors wouldn’t see much of a premium. Only in the case of Gilat receiving a price that they can’t refuse, should they accept a takeover bid. Otherwise they should keep up the good work they are doing, keep signing deals, and grow the company. If you do that, the stock price will take care of itself.
Disclosure: Author’s fund holds a position in GILT. He has no position in any other stock mentioned as of 2/22/08.
Please see our Disclaimer HERE.
NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.
Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
