Gilat's $475 million sale could fall apart

Israeli-based Gilat Satellite Networks Ltd., which services satellite-based communications networks, said Monday a group of private investors that agreed, in March, to buy the company said they would not close the deal at the agreed upon price of $475 million.

Gilat said the group of investors asked for changes to a previously agreed upon deal and would not pay the agreed $11.40 per share for the company. That group of potential buyers includes The Gores Group LLC, Mivtach Shamir Holdings Ltd., DGB Investments Inc. and companies affiliated with Roy Ben-Yami, Ami Lustig and Eytan Stibbesaid.

Gilat said it rejected a number of proposed changes, though it did not specify the proposals.

The deal made in March included a buyout price of $475 million in cash, or $11.40 per share, which represented a 38 percent premium to Gilat's average closing price over 30 days ended April 25, 2007, the day in which Mivtach Shamir Holdings Ltd. issued a formal offer.

Gilat said the buyers have made a number of new verbal proposals that are substantially different from the definitive agreement. Earlier this month, the private investors notified Gilat that they were looking into whether the company fulfilled conditions of the merger, which Gilat has already said it met.

"It is disappointing that the definitive agreement, which was achieved after 11 months of intense due diligence and negotiations, has not been honored by the purchasers as of yet," said Chief Executive and Chairman Amiram Levinberg," in a statement.

Gilat said it informed the buyers they have 72 hours to complete the buyout or legal action could be taken. The deal includes a breakup free of $47.3 million, Gilat said.

"I hope that the consortium will meet its obligations without delay so we need not take legal actions to enforce the undertakings set forth in the agreement," Levinberg said.

Gilat shares closed Friday at $8.64.