Rumours are again circulating that Gilat Satellite Networks(GILT) is about to be acquired. We reported on this a few months ago and it appears that we actually got one right. Giddy up!Globes is reporting, “that after months of rumors and speculation, Gilatcould be sold in the near future. It is believed that a group headed by Mivtach Shamir Holdings Ltd., one of its current shareholders, is close to signing an agreement for the acquisition of Gilat, after raising its bid to $11.60 per share. The new offer reflects a valuation of $455 million for Gilat, or $483 million fully diluted, and a 14.2% premium over its current market price.

Gilat develops and produces very small aperture terminals for satellite-based communications networks. As my buddy Zack Miller wrote,”Competition in the satellite industry is heating up. Media companies, along with cable and wireless companies, have declared their desire to enter the satellite communications market. Instead of building an entire division dedicated to this, some of these companies are looking to either partner with, or acquire,an existing firm with good sales distribution. Gilat, with its focus on emerging markets and strong balance sheet, could be a good acquisition candidate.”

Disclosure: Author’s fund holds a position in GILT. He has no position in any other stock mentioned as of 1/23/08.

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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.

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Zack Miller
IsraelNewsletter.com

Jacada (Nasdaq: JCDA), the Israeli software provider for unified customer service, has been murmuring about a material deal back in early August. Israel Opportunity Investor’s Aaron Katsman recently covered the announcement of the deal with Central Hudson Gas & Electric. Well, there’s another material announcement. This time it’s with O2 UK, the leading provider of mobile services to consumers and businesses in the United Kingdom.

Elbit Systems (Nasdaq: ESLT) out with strong earnings Wednesday with a posted 41 percent rise in third-quarter net profit on higher revenues and forecast a better performance in 2008. We chose Elbit as one of Israel Opportunity Investor’s “7 Touchdown Stocks” recently.

Gilat Satellite (Nasdaq: GILT) reported earnings for the 3rd quarter that more than doubled as the company increased revenue and held back costs. We wrote recently about why Gilat might be an interesting play right here.

NICE Systems (Nasdaq: NICE) announced that it has expanded its relationship with DirectTV (NYSE: DTV).

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Aaron Katsman
www.IsraelNewsletter.com

First things first. A big thank you to fellow IsraelNewsletter colleague Doug Goldstein, for taking out the entire IsraelNewsletter team(with spouses), to a really nice restaurant last night, and springing for the check. Giddy up.

Much has been made over the last few days over last weekend’s FT article about Gilat Satellite Networks(GILT) and potential suitors. The article said that the company could fetch upwards of $500 million in a deal. That puts it about 15% above it’s current market value. I would expect a deal to get done and I wouldn’t be surprised if it was for even more than the predicted $500 million.

Gilat’s business is doing well. Revenues for Q2 ‘07 were at a 5-year high. Net income grew strongly, and they continue to sign both extensions and new deals. Yesterday they signed an expansion deal with Russian telecommunications provider North-West Telecom. North-West Telecom is expanding its Gilat SkyEdge satellite network to bring telephony and broadband Internet services to a growing number of remote communities in northwest Russia. The network expansion will serve many more sites in the Murmansk, Karelia, Komi and Vologda regions. Heck, if they do a deal in Kamchatka, they would win in RISK.

The company has rejected offers in the past at lower valuations, and I would expect them to hold out for a higher premium than is currently being mentioned. At $10.90 a share, either through a takeover or growing the business, the stock looks cheap.

Please see our Disclaimer HERE.

Disclosure: Author has no holdings in any stock mentioned.

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Aaron Katsman is the 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.

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