Gilat exits buyout agreement with investors

Gilat Satellite Networks Ltd. said Friday it is exiting a deal with a group of private investors who had intended to buy the company, saying those buyers intentionally breached the terms of their agreement.

Israel-based Gilat said the investors also failed to close the deal prior to its Thursday deadline, and offered "numerous verbal proposals" that differed substantially from the original agreement since being notified of the deadline.

The investors initially approached Gilat, which provides satellite-based communication networks, in March to buy the company for $475 million, or $11.40 per share. The group included The Gores Group LLC, Mivtach Shamir Holdings Ltd., DGB Investments Inc. and companies affiliated with Roy Ben-Yami, Ami Lustig and Eytan Stibbesaid.

On Monday, Gilat said the investors did not intend to close the deal at the initial agreed-upon price. Terms of the deal provide for a termination fee of $47.3 million, payable to Gilat by Sept. 10, if the deal is intentionally breached.

Galactic Holdings Ltd., an entity formed by the investors who were to buy Gilat, denied the breach in a statement late Friday, saying that Gilat's move to end the purchase agreement "is a material breach of the agreement."

The statement also said Galactic and the investor group had told Gilat several times that conditions for closing the deal were not met due to Gilat's operating performance. Galactic added that despite that it has made an offer to Gilat shareholders in hopes of closing the deal.

Shares of Gilat fell 43 cents, or 5.4 percent, to close at $7.55. They earlier hit a year low of $7.45, after ranging between $7.50 and $11.34 for the past 52 weeks.