Comtech Telecommunications will acquire CPI International Inc. in a cash and stock deal valued at roughly $289 million, the communications equipment maker said Monday.
CPI shares spiked 20 percent, or $2.63, to $15.68 in afternoon trading.
Comtech says the acquisition will lift its profits and nearly triple the size of its segment devoted to RF microwave amplifiers — a technology used to boost the strength of satellite and broadband communications.
Comtech said it will pay CPI shareholders a combination of cash and stock worth roughly $16.40 per share, a premium of nearly 26 percent over CPI's closing share price of $13.05 on Friday. CPI has roughly 17.6 million shares outstanding, according to a recent securities filing, bringing the equity value to $289.1 million.
Including debt, the companies value the deal at about $472.3 million.
CPI shareholders would get $9 per share in cash, plus a fraction of Comtech stock between 0.2382 and 0.2132 per share. Based on Comtech's closing share price of $31.06 on Friday, CPI shareholders would get $7.40 worth of Comtech stock for every share of CPI they own.
Comtech Telecommunications Corp. said it will fund the acquisition with cash and by selling 4.4 million common shares.
The company expects the acquisition will save it $1 million to $2 million in the first year and $5 million to $7 million annually after that.