Comtech Telecommunications Corp. (“Comtech”) (NASDAQ: CMTL) has closed the acquisition of UHP Networks Inc. (“UHP”). Founded in 2011, UHP is based in Canada and has developed revolutionary technology that is transforming the growing Very Small Aperture Terminal (“VSAT”) market.
UHP’s unique time divisional multiple access (“TDMA”) technology used in its VSAT platforms has software defined network functionality that offers best-in-class support for very large networks. With more than 3 billion people globally who are not connected to any wireless services, the UHP acquisition allows Comtech’s customers to cost-effectively provide service to end-users with the quality and reassurance of the Comtech brand and service offerings.
All UHP employees are expected to join Comtech, including Vagan Shakhgildian, the President of UHP, who will also assume the role of Senior Vice President of Network Products, leading Comtech’s efforts to expand the presence of both HEIGHTS™ and UHP’s solutions in the mobile backhaul, maritime, enterprise and defense/government markets, which all have a growing need for high-speed satellite-based networks.
The initial up-front payment of approximately $24.0 million was paid in shares of Comtech common stock. An additional payment of $5.0 million (payable in cash and/or common stock at Comtech’s option) is due upon certain conditions being met, all of which are expected to occur within the next 12 months. The purchase agreement also provides for an earn-out payment of up to an additional $9.0 million (payable in cash and/or common stock at Comtech’s option) if certain agreed upon sales milestones are reached over an eighteen-month period. Approximately 1.0 million shares of Comtech’s common stock were issued at closing in respect of the initial payment and escrow arrangements under the terms of the purchase agreement.
Comtech is not purchasing UHP’s sister company headquartered in Moscow; however, Comtech will be able to immediately market and sell UHP products to customers in that region. Except for five months of incremental amortization of intangible assets that is expected to approximate $1.0 million, the acquisition will not materially impact Comtech’s fiscal 2021 consolidated net sales or Adjusted EBITDA guidance previously issued on December 9, 2020.
Fred Kornberg, Chairman of the Board and Chief Executive Officer of Comtech said, “The acquisition of UHP fits perfectly with our strategy of offering the most robust and advanced wireless communications solutions for our global customers. We are delighted to acquire UHP and expect use of its incredible technology to expand globally for many years to come.”