Satellite Earth station component manufacturer Comtech Telecommunications Group is purchasing competitor Radyne Corp. for $223.6 million in an all-cash transaction that both companies' boards of directors have approved, Comtech and Radyne announced May 12. The $11.50-per-share price represents a 33 percent premium over where Radyne stock has been trading in recent months and responds to the protests of several of Radyne's institutional shareholders, who had urged the company to seek a buyer. The enlarged Comtech - with $651.5 million in combined 2007 revenue from both companies - will become a heavyweight in the industry of building amplifiers for satellite ground stations. Radyne also brings to Comtech AeroAstro, the small-satellite manufacturer Radyne purchased in August 2007. Comtech officials said they intend to keep AeroAstro for the potential in its business with the U.S. Defense Department. Comtech estimates that it will incur about $5 million in transaction costs and between $7 million and $10 million in restructuring charges to complete the deal. The company expects the merger will create savings of up to $4 million during the first 12 months after it is completed, and $9 million to $11 million in annual savings after that, Comtech Chief Financial Officer Michael Porcelain said in a May 12 conference call with investors. Melville, N.Y.-based Comtech will be closing Phoenix-based Radyne's main production facility in Phoenix and moving that production to a Comtech facility in Tempe, Ariz. Comtech Chief Executive Fred Korn-berg said during the conference call that the merger will be accretive to Comtech's earnings within 12 months, "and significantly accretive after that."
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