Gilat Is Paying About 9.4x Adjusted EBITDA for Comtech and Integration Has to Justify the Price

GILAT disclosed on June 15 that it signed on June 14 to acquire most of Comtech's Satellite & Space Communications segment for $157.5 million in cash, turning its net cash position into an integration and defense-margin question. The deal is expected to be funded from existing cash resources, with the company reporting approximately $170 million of net cash at the end of the first quarter. This is large enough to change the scale of the defense business: after the deal, the company presents projected annual revenue above $700 million and adjusted EBITDA (earnings before interest, tax, depreciation and amortization after adjustments) of $80 million, with the acquisition expected to more than double defense revenue. The key issue is the price relative to the profitability being acquired: the acquired business generated adjusted revenue of $195.2 million and adjusted EBITDA of $16.8 million in the 12 months ended January, an adjusted EBITDA margin of about 8.6%. That means the purchase price equals about 9.4x adjusted EBITDA before synergies, before integration costs, and before CFIUS (the U.S. foreign-investment review committee) and HSR (the U.S. antitrust waiting-period process) approvals. A $10 million advance payment has already been made, and in certain cases it will not be returned upon failure to obtain the required regulatory approvals. Closing by the end of 2026 would shift the follow-up to Comtech's ability to add durable defense profitability, not only revenue volume that requires more cash and management attention.

The price keeps synergies inside the return calculation

This is not a small payment for a distant option. The buyer is paying $157.5 million in cash, subject to adjustments, for a business that generated adjusted revenue of $195.2 million and adjusted EBITDA of $16.8 million in the 12 months ended January. On a simple calculation, the purchase price is about 9.4x the acquired business's adjusted EBITDA before any synergy. This is not an equity-valuation conclusion. It is a transaction-price check: for the acquisition to create operating value, GILAT must improve margins, expand cross-selling or reduce costs without damaging the customers and engineers that come with the business.

The acquired-business numbers are not presented as a full standalone public company already trading on its own. Comtech adjusted them to reflect the business being sold, and GILAT added further adjustments mainly for accounting policies and expense allocations. That makes the gap between nearly $200 million of revenue and $16.8 million of adjusted EBITDA more important than the figures alone. The acquisition can add scale quickly, and the economic proof will come with acquired-margin improvement once the business enters the existing structure.

Cash funds the deal and reduces the margin for error

GILAT presents the transaction as fully funded from existing cash resources. That matters because the filing does not include new debt, share issuance, or future seller payments tied to the acquired business's operating results. For shareholders, the immediate meaning is no stated dilution and no disclosed dependence on the debt market to complete the closing.

The other side of that funding route is the size of the cash use. Net cash of approximately $170 million at the end of the first quarter, against a $157.5 million purchase price, leaves less room for error against price adjustments, integration costs or operating needs above expectations. The $10 million advance sharpens the point: the cash has already left, and in certain cases the sellers will not be required to return it upon failure to obtain regulatory approvals.

GILAT's prior acquisition history makes the cash check more relevant. The SBS acquisition completed in January 2025 was partly funded with a $60 million credit facility that was fully repaid in December after private placements, and that business required capital for inventory, production and delivery. The Comtech transaction does not currently include new debt, but it shifts the company from a balance sheet with net cash to a business that needs integration, employee retention, customer retention and possibly additional investment to reach the stated profitability targets.

The acquired business extends defense into space infrastructure and beyond-line-of-sight communications

The business GILAT is buying is not the entire Comtech Satellite & Space Communications segment. The deal includes most of the segment and mainly excludes the cyber and services lines. The acquired activity includes satellite ground infrastructure for GEO, MEO and LEO constellations, Troposcatter BLOS systems (beyond-line-of-sight communications using tropospheric scatter), engineering services for satellites and launch vehicles, and RF (radio frequency) and space-electronics capabilities.

This is a more natural extension of the defense business than a broad financial acquisition. The acquired business serves the U.S. Department of War, allied defense agencies and commercial customers including satellite operators and energy companies. For GILAT, the potential benefit sits in the combination of products, U.S. presence, manufacturing and engineering capacity, and access to larger defense and space opportunities.

The complexity comes from the same place. GILAT already operates DataPath in the U.S., a U.S. contractor on classified programs that moved in June 2025 to a Proxy Agreement under FOCI rules (U.S. foreign ownership, control or influence mitigation rules). Acquiring another U.S. defense asset adds oversight interfaces, workforce retention and local management complexity alongside the revenue. The announcement that defense revenue will more than double is therefore the start of an operating proof path, not proof that the defense margin has already improved.

Revenue enters the accounts only after CFIUS and HSR approvals

The signature is more binding than a memorandum of understanding, but closing still depends on conditions. The transaction requires expiration or termination of the HSR waiting period, CFIUS approval, no legal prohibition, the accuracy of contractual representations and covenants, and no material adverse effect in the acquired business. The company expects closing by the end of 2026, and the agreement can be terminated after 12 months without closing, with a three-month extension available while the parties wait for regulatory approval.

Those timelines matter because the acquired business does not enter the accounts before closing. During the waiting period, the parties need to retain customers, suppliers and engineers, and avoid damaging the activity from which the synergies are supposed to come. If closing takes longer, the risk is not only delayed revenue. It also includes erosion in customer relationships, employee departures and continued management spending on a transaction that has not yet produced accounting contribution.

The transaction risks frame the right follow-up: reaching post-closing revenue and adjusted EBITDA targets, integrating the business into GILAT's systems, and delivering sales, efficiency and scale synergies. These are not generic acquisition caveats. Here they sit directly on the $157.5 million price and on an acquired adjusted EBITDA margin of 8.6%.

The next filing needs to break down margin and integration costs

The Comtech acquisition moves GILAT up a level in defense, but the economic value will not be determined by the revenue that arrives on closing day. The filings that change the read will be CFIUS and HSR approvals, the first breakdown of backlog and customers after closing, actual integration costs, and the acquired business's margin inside the combined company. Margin movement toward the $80 million adjusted EBITDA target without another large cash use would make the transaction look like a high-quality scale acquisition. Low margins or delayed closing would turn the purchase price into a burden on the net cash position that had been the company's main advantage.