Comtech Telecommunications (NASDAQ:CMTL), a network hardware group, has agreed to acquire TeleCommunication Systems (NASDAQ:CMTL) for US$430.8mln enterprise value.
Comtech will purchase TeleCommunication in a cash transaction for US$5.00 per TeleCommunicaiton share, the two companies said in a statement on Monday.
The $5.00 price per share represents a premium of 13.9% as compared to the last closing trading price of TeleCommunication common stock.
The combined companies employ about 2,000 people.
"The acquisition is a significant step in our strategy of entering complementary markets and expanding our domestic and international commercial offerings, Stanton Sloane, Chief Executive Officer of Comtech, said in the statement.
The acquisition is expected to be cash accretive in the first year of the acquisition and to result in approximately $12.0 million of synergies in the second year after closing.
In connection with the acquisition of TeleCommunication, Comtech expects to incur US$27.5 million in transaction related expenses.
Shares of TeleCommunications jumped 12.5% to US$4.94 at 9:50 a.m. in New York, while shares of Comtech slid 7.5% to $20.65.