Gilat intends to file counterclaims seeking enforcement of the merger agreement or hundreds of milli
Gilat Satellite Networks Ltd., a worldwide leader in satellite networking technology, solutions and services, announced that further to its announcement of July 8, 2020, it was notified on July 11, 2020 that an amended complaint was filed by Comtech Telecommunications Corp. and its subsidiary, Convoy Ltd., against Gilat in the Court of Chancery of the State of Delaware. The amended complaint seeks an additional declaratory judgment that Gilat has suffered a “Material Adverse Effect” as defined in the Merger Agreement, as a result of the Covid-19 pandemic and, as a consequence, Comtech is not required to consummate the merger because certain closing conditions of the Merger Agreement cannot be satisfied.
Gilat strongly rejects all such allegations. Gilat believes that no Material Adverse Effect under the Merger Agreement has occurred and that Comtech’s complaint is nothing more than an effort to avoid its clear contractual obligation to acquire Gilat, due to Comtech’s own rapidly deteriorating performance.
Comtech’s continuous willful breaches have resulted and are continuing to result in significant monetary damages to Gilat and its shareholders, and are expected to amount to hundreds of millions of dollars if the merger is not consummated.
While Gilat has not interfered or taken any action to interfere with Comtech’s pending application with the Russian Federal Anti-Monopoly Service (FAS) or otherwise breached the Merger Agreement, Gilat believes that Comtech has willfully breached its obligations under the Merger Agreement so as to attempt to ensure that FAS approval is not timely obtained and Comtech will not be required to consummate the merger.
Gilat intends to vigorously defend its position in connection with the claims raised by Comtech and all related matters.
Gilat also intends to file a counter claim against Comtech seeking, among other things, a declaration that Comtech cannot terminate the Merger Agreement and, if the merger is not consummated, Comtech should pay Gilat (on behalf of itself, its shareholders and optionholders) monetary damages (which are contractually uncapped) for all losses that Gilat and its shareholders and optionholders have suffered as a result of Comtech’s willful breaches of the Merger Agreement, which Gilat will assert amount to hundreds of millions of dollars.