Acacia Research seeks to buy Comtech Telecommunications -sources

Acacia Research

01/11/2021 14:36

(Updates with company's response, stock price)
    By Svea Herbst-Bayliss
    Nov 1 (Reuters) - Acacia Research Corp  ACTG.O , which buys
businesses in sectors such as technology and healthcare, has
made an offer to acquire Comtech Telecommunications Corp
 CMTL.O , a provider of wireless communication systems for
police and other emergency services, for $790 million in cash,
the company confirmed on Monday.
    The bid comes as Comtech faces pressure from one of its
shareholders, Outerbridge Capital Management LLC, to explore a
sale of the entire company. Comtech angered Outerbridge last
month when it announced a deal to sell a $100 million stake in
itself through a PIPE deal to hedge funds Magnetar Capital LLC
and White Hat Capital Partners LP. In a PIPE deal, investors buy
a publicly traded stock below its currently traded price.
    Acacia, which is backed by activist hedge fund Starboard
Value, has offered $30 per share in cash for Comtech, said two
sources familiar with the bid but not permitted to discuss it
publicly. This marked a 39% premium to Comtech's closing share
price on Friday. There is no certainty that Comtech will engage
in negotiations or that any deal will be reached, the sources
added, requesting anonymity because the matter is confidential. 
    Comtech said it received Acacia's unsolicited and
non-binding proposal and is evaluating it. "The Board will
determine the course of action that it believes is in the best
interests of the Company and its stockholders. No stockholder
action is required at this time," the company said in a
statement.
    Comtech's stock price jumped 15.30% in early trading on
Monday to $24.79.
    Acacia agreed with Starboard two years ago that the hedge
fund would provide as much as $400 million in capital for
strategic investments and acquisitions. Acacia is led by private
equity and hedge fund veteran Clifford Press.
    Outerbridge has challenged Comtech by nominating three
directors to the company's five-member board. Comtech
shareholders will elect board members at the company's annual
meeting in December.
    Comtech said last month its chief executive, Fred Kornberg, 
would be succeeded by its president and chief operating officer,
 Michael Porcelain. Outerbridge criticized the move, arguing
that Porcelain contributed to Comtech's poor stock performance.
Outerbridge has also said the stake sale agreed last month
carried no premium and was expensive and dilutive to Comtech
shareholders.

 (Reporting by Svea Herbst-Bayliss in Boston; editing by Richard
Pullin and Steve Orlofsky)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))