Comtech Telecommunications has reached an agreement to sell its power systems technology product line to Stellant Systems, a portfolio company of private-equity firm Arlington Capital Partners. The deal is valued at up to $40 million.
Strong Open for Comtech Telecommunications Shares
Shares of Comtech Telecommunications are expected to have a strong open following the announcement. In premarket trading, the shares surged by 17% after closing at $8.14 on Thursday. The stock has experienced a decline of 33% year-to-date.
Details of the Deal
As part of the definitive deal, Stellant Systems will acquire Comtech’s product line for an initial payment of $35 million. Additionally, there is a contingent consideration of $5 million based on the achievement of certain targets. The transaction is expected to be finalized by the end of the month.
Positive Sales Forecast
Comtech Telecommunications has also released its sales forecast for the upcoming fiscal first quarter. The company anticipates a 1% to 4% sequential increase in sales following a 17% growth in sales during the previous quarter. The total sales for the three months ending July 31 reached $148.8 million, representing a significant year-over-year increase. Furthermore, the company reported a narrowed net loss of 19 cents per share for the fourth quarter compared to a loss of 26 cents per share in the previous year.