Filed by Gilat Satellite Networks Ltd.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Gilat Satellite Networks Ltd.
Commission File No.: 000-21218
GILAT SATELLITE NETWORKS LTD.
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April 3, 2020
To the Shareholders of Gilat Satellite Networks Ltd.:
You are cordially invited to attend the Extraordinary General Meeting of Shareholders of Gilat Satellite Networks Ltd. (“Gilat”), to be held at Gilat’s principal executive offices, at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel, on Friday, May 8, 2020 at 12:00 p.m. (Israel time), and thereafter as it may be adjourned from time to time (the “General Meeting”).
In light of the recent outbreak of the coronavirus (COVID-19) pandemic, Gilat reserves the option to convert the General Meeting from a physical meeting to a virtual meeting at a later date. In such event, Gilat will issue a press release and furnish a Form 6-K or other document with the SEC prior to the date of the General Meeting outlining the manner in which shareholders may attend the virtual meeting.
On January 29, 2020, Gilat entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”) with Comtech Telecommunications Corp., a Delaware corporation (“Comtech”), and Convoy Ltd., a company organized under the laws of the State of Israel and a wholly-owned subsidiary of Comtech (“Merger Sub”), pursuant to which, among other things, Comtech will acquire Gilat by way of the merger of Merger Sub with and into Gilat (the “Merger”), with Gilat surviving the Merger as a wholly-owned subsidiary of Comtech. The Merger is structured as a statutory merger pursuant to Sections 314-327 of the Companies Law, 5759-1999, of the State of Israel (the “ICL”).
On the terms and subject to the conditions of the Merger Agreement, (i) each ordinary share, nominal value NIS 0.20, of Gilat (a “Gilat Share”), issued and outstanding immediately prior to the effective time of the Merger (the “Effective Time”) will be cancelled and extinguished and automatically converted into the right to receive (the “Merger Consideration”), a combination of  (A) $7.18 in cash, without interest, plus (B) 0.08425 of a validly issued, fully paid and nonassessable share of the common stock of Comtech, par value $0.10 per share (the “Comtech Common Stock”), with cash payable in lieu of fractional shares of Comtech Common Stock, subject to applicable withholding taxes, for each Gilat Share held by Gilat’s shareholders as of immediately prior to the effective time of the Merger.
At the General Meeting, you will be asked to consider and vote on a resolution for the approval of (i) the Merger Agreement; (ii) the merger of Merger Sub with and into Gilat in accordance with Sections 314-327 of the ICL, following which Merger Sub will cease to exist as a separate legal entity and Gilat will become a wholly-owned subsidiary of Comtech; (iii) the Merger Consideration; and (iv) all other transactions contemplated by the Merger Agreement and related to the Merger, as detailed in Gilat’s proxy statement/​prospectus for the General Meeting (collectively, the “Merger Proposal”).
Gilat’s Board of Directors (the “Gilat Board”) has unanimously: (i) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable and fair to, and in the best interests of, Gilat and its shareholders and that, considering the financial position of the merging companies, no reasonable concern exists that the surviving company will be unable to fulfill the obligations of Gilat to its creditors; (ii) approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement; and (iii) determined to recommend that the shareholders of Gilat approve the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, all upon the terms and subject to the conditions set forth in the Merger Agreement.
In addition to the Merger Proposal, the following matters will be on the agenda for the General Meeting:
1.
the approval to purchase a seven-year “tail” endorsement to Gilat’s current directors’ and officers’ liability insurance policy;

2.
the approval of payment of a transaction bonus to the Chief Executive Officer of Gilat;
3.
the approval of payment of a transaction bonus to the Chief Financial Officer of Gilat;
4.
the approval of an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors; and
5.
the reelection of Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board, for an additional three-year term or until his prior termination or resignation.
GILAT’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE MERGER PROPOSAL AND THE OTHER PROPOSALS ON THE AGENDA.
Enclosed with this letter you will find a copy of the Notice of the Extraordinary General Meeting and the Proxy Statement for the General Meeting. The enclosed proxy statement/prospectus and the attachments thereto contain important information about the General Meeting, the Merger Agreement, the Merger, all the other transactions contemplated by the Merger Agreement and the other agenda items, and you are urged to read them carefully and in their entirety.
We urge you to read the accompanying proxy statement/prospectus, including the Annexes and the documents incorporated by reference, carefully and in its entirety. In particular, we urge you to read carefully the section entitled “Risk Factors” beginning on page 24.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF GILAT SHARES YOU OWN. ACCORDINGLY, YOU ARE REQUESTED TO PROMPTLY COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE PROVIDED, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. THIS WILL NOT PREVENT YOU FROM VOTING YOUR GILAT SHARES IN PERSON IF YOU SUBSEQUENTLY CHOOSE TO ATTEND THE MEETING.
Thank you for your cooperation,
/s/ Dov Baharav
Dov Baharav
Chairman of the Board of Directors
Neither the Securities and Exchange Commission nor any state securities commission, including the Israel Securities Authority, has approved or disapproved of the securities to be issued under this proxy statement/​prospectus or determined if this proxy statement/prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
This proxy statement/prospectus is dated April 3, 2020 and is first being made available to the Gilat shareholders on or about April 9, 2020.

 
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GILAT SATELLITE NETWORKS LTD.
NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
To the Shareholders of Gilat Satellite Networks Ltd. (“Gilat”):
Gilat cordially invites you to attend the Extraordinary General Meeting of Shareholders of Gilat (the “General Meeting” or the “meeting”) to be held on Friday, May 8, 2020 at 12:00 p.m. (Israel time), at Gilat’s principal executive offices at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel (the telephone number at that address is +972-3-925-2000), and thereafter, as it may be adjourned from time to time.
In light of the recent outbreak of the coronavirus (COVID-19) pandemic, Gilat reserves the option to convert the General Meeting from a physical meeting to a virtual meeting at a later date. In such event, Gilat will issue a press release and furnish a Form 6-K or other document with the SEC prior to the date of the General Meeting outlining the manner in which shareholders may attend the virtual meeting.
The following matters are on the agenda for the General Meeting:
1.
the approval of  (i) the Agreement and Plan of Merger dated as of January 29, 2020 (as it may be amended from time to time, the “Merger Agreement”) by and among Gilat, Comtech Telecommunications Corp., a Delaware corporation (“Comtech”), and Convoy Ltd., a company organized under the laws of the State of Israel and a wholly-owned subsidiary of Comtech (“Merger Sub”); (ii) the merger of Merger Sub with and into Gilat in accordance with Sections 314-327 of the Israeli Companies Law, 5759-1999 (the “ICL”), following which Merger Sub will cease to exist as a separate legal entity and Gilat will become a wholly-owned subsidiary of Comtech (the “Merger”); (iii) the right to receive (the “Merger Consideration”), a combination of  (A) $7.18 in cash, without interest, plus (B) 0.08425 of a validly issued, fully paid and nonassessable share of the common stock of Comtech, par value $0.10 per share (the “Comtech Common Stock”), with cash payable in lieu of fractional shares of Comtech Common Stock, subject to applicable withholding taxes, for each ordinary share, par value NIS 0.20 per share, of Gilat (the “Gilat Shares”) held by Gilat’s shareholders as of immediately prior to the effective time of the Merger; and (iv) all other transactions contemplated by the Merger Agreement and related to the Merger, as detailed in Gilat’s proxy statement/prospectus for the General Meeting (collectively, the “Merger Proposal” or “Proposal 1”);
2.
the approval of the purchase of a seven-year “tail” endorsement to current directors’ and officers’ liability insurance policy (“Proposal 2”);
3.
the approval of the payment of a transaction bonus to the Chief Executive Officer of Gilat (“Proposal 3”);
4.
the approval of the payment of a transaction bonus to the Chief Financial Officer of Gilat (“Proposal 4”);
5.
the approval of an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors (“Proposal 5”); and
6.
the reelection of Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board for an additional three-year term or until his prior termination or resignation (“Proposal 6”).
 

 
GILAT’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE MERGER PROPOSAL AND EACH OF THE OTHER PROPOSALS.
Further information regarding the Merger Proposal and the other proposals on the agenda for the General Meeting is included in the proxy statement/prospectus, which is being mailed to Gilat’s shareholders in advance of the General Meeting. The proxy statement/prospectus is also being furnished to the United States Securities and Exchange Commission (the “SEC”) on Form 6-K and is available to the public on the SEC’s website at http://www.sec.gov and Gilat’s website at www.Gilat.com, and, in addition, at http://www.magna.isa.gov.il or http://maya.tase.co.il. A form of proxy card will be enclosed with the proxy statement/prospectus.
Record Date
Only shareholders of record at the close of business on April 8, 2020 (the “Record Date”) will be entitled to receive notice of, and to vote at, the General Meeting.
A shareholder, whose Gilat Shares are registered with a member of the Tel Aviv Stock Exchange Ltd. (the “TASE”), is required to prove his or her share ownership to vote at the General Meeting. Such shareholder is required to provide Gilat with an ownership certificate (as of the Record Date) from that TASE member and is entitled to receive the ownership certificate in the branch of that TASE member or, if the shareholder so requests, by mail to his or her address (in consideration of mailing fees only). Such a request should be made in advance for each specific securities account.
Quorum and Voting
A quorum must be present in order for the General Meeting to be held. Pursuant to Gilat’s Articles of Association, the quorum required for the General Meeting consists of at least two shareholders present, in person or by proxy, who hold or represent between them more than 25% of Gilat’s issued and outstanding share capital. Broker non-votes and abstentions will be counted as present at the General Meeting for the purpose of determining whether a quorum is present. A broker non-vote occurs when a bank, broker or other nominee holding Gilat Shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received voting instructions from the beneficial owner. While counted for quorum purposes, abstentions and broker non-votes will not be treated as voting shares and will not have any effect on whether the requisite vote is obtained for all matters placed before shareholders for their vote. None of the proposals at the General Meeting allow for discretionary voting by banks, brokers or other nominees. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall be adjourned to May 15, 2020, at the same time and place. At such adjourned meeting, the presence of at least two shareholders in person or by proxy (regardless of the voting power possessed by their shares) will constitute a quorum.
The approval of the Merger Proposal (Proposal 1) requires the affirmative vote of holders of at least a majority of the Gilat Shares present, in person or by proxy, and voting on the Merger Proposal (not taking into consideration abstentions), excluding any Gilat Shares that are held by Merger Sub, Comtech or by any person or entity holding at least 25% of the “means of control” (within the meaning of the ICL) of either Merger Sub or Comtech, or any person or entity acting on behalf of either Merger Sub or Comtech or any person or entity described in the previous clause, including any of their affiliates.
The approval of each of Proposals 2, 3, 4, 5 and 6 requires the affirmative vote of a majority of the Gilat Shares present, in person or by proxy, and voting on such proposal (not taking into consideration abstentions). In addition, in order to approve each of Proposals 2, 3, 4, 5 and 6, the shareholders’ approval must either (i) include at least a majority of the Gilat Shares voted by shareholders who are not controlling shareholders (within the meaning of the ICL) and who are not shareholders who have a personal interest (within the meaning of the ICL) in the approval of such proposal (excluding, in the case of Proposal 6, a personal interest that is not related to a relationship with the controlling shareholders), not taking into consideration abstentions, or (ii) be obtained such that the total Gilat Shares of non-controlling shareholders and non-interested shareholders voted against such proposal do not represent more than two percent of the outstanding Gilat Shares.
 

 
Gilat cannot complete the Merger unless its shareholders approve the Merger Proposal (Proposal 1). However, the completion of the Merger is not contingent on the approval of Proposals 2, 3, 4, 5 or 6.
Position Statements and Proposals by Shareholders
Shareholders are allowed to apply in writing, through Gilat, to the other shareholders of Gilat in order to solicit their vote on items on the agenda of the General Meeting (“Position Notice”). Position Notices must be in English and be sent to Gilat’s offices at the address below and otherwise must comply with applicable law. Any valid Position Notice received will be furnished to the SEC on Form 6-K, and will be made available to the public on the SEC’s website at http://www.sec.gov and the Gilat’s website at www.Gilat.com, and, in addition, at http://www.magna.isa.gov.il and http://maya.tase.co.il. The last date for issuance of such Position Notices to Gilat is April 28, 2020, and the last date for submitting a request to include a proposal in accordance with Section 66(b) of the ICL is April 10, 2020.
Eligible shareholders, holding at least one percent of Gilat’s outstanding ordinary shares, may present proper proposals for inclusion in the meeting by submitting their proposals to Gilat no later than one week following the date hereof and, if Gilat determines that a shareholder proposal is appropriate to be added to the agenda of the meeting, it will publish a revised agenda with the SEC on Form 6-K, and the revised agenda will be made available to the public on the SEC’s website at http://www.sec.gov and Gilat’s website at www.Gilat.com, and, in addition, at http://www.magna.isa.gov.il and http://maya.tase.co.il.
A shareholder whose Gilat Shares are registered with a TASE member and are not registered on the Gilat’s shareholder’s register is entitled to receive from the TASE member who holds the Gilat Shares on the shareholder’s behalf, by e-mail, for no charge, a link to the text of proxy card and to the Position Notices posted on the Israel Securities Authority website, unless the shareholder notified the TASE member that he or she is not interested in receiving such; provided, that such notice was provided with respect to a particular securities account prior to the Record Date.
All shareholders are entitled to contact Gilat directly and receive the text of the proxy materials and any valid Position Notice. Once made available to the public as described above, such documents will also be available for inspection at Gilat’s offices, which are located at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel, during regular business hours and subject to prior coordination. Gilat’s phone number is +972-3-925-2000.
By Order of the Board of Directors,
/s/ Dov Baharav
Dov Baharav
Chairman of the Board of Directors
 

 
IT IS IMPORTANT THAT THE ENCLOSED PROXY CARD BE
COMPLETED, SIGNED, DATED AND RETURNED PROMPTLY
PROXY STATEMENT
EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON FRIDAY, MAY 8, 2020
INTRODUCTION
This proxy statement/prospectus is being distributed to Gilat’s shareholders in connection with the solicitation by Gilat’s Board of Directors (the “Gilat Board”) of proxies to be used at the Extraordinary General Meeting of Shareholders, as it may be adjourned or postponed from time to time (the “General Meeting” or the “meeting”), to be held at Gilat’s principal executive offices located at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel, on May 8, 2020, at 12:00 p.m. (Israel time) and thereafter as it may be adjourned from time to time. In light of the recent outbreak of the coronavirus (COVID-19) pandemic, Gilat reserves the option to convert the General Meeting from a physical meeting to a virtual meeting at a later date. In such event, Gilat will issue a press release and furnish a Form 6-K or other document with the SEC prior to the date of the General Meeting outlining the manner in which shareholders may attend the virtual meeting. Gilat is first mailing this proxy statement/prospectus, the accompanying notice, letter to shareholders and proxy card on or about April 9, 2020 to the holders of Gilat Shares entitled to notice of, and to vote at, the General Meeting. All references to “Gilat” are references to Gilat Satellite Networks Ltd. and its subsidiaries, references to “you” and “your” refer to Gilat’s shareholders, all references to “$” or to “US$” are to United States dollars and all references to “NIS” are to New Israeli Shekels.
At the General Meeting, shareholders will be asked to consider and vote on:
1.
the approval of  (i) the Agreement and Plan of Merger dated as of January 29, 2020 (as it may be amended from time to time, the “Merger Agreement)”) by and among Gilat, Comtech Telecommunications Corp., a Delaware corporation (“Comtech”), and Convoy Ltd., a company organized under the laws of the State of Israel and a wholly-owned subsidiary of Comtech (“Merger Sub”); (ii) the merger of Merger Sub with and into Gilat in accordance with Sections 314-327 of the Israeli Companies Law, 5759-1999 (the “ICL”), following which Merger Sub will cease to exist as a separate legal entity and Gilat will become a wholly-owned subsidiary of Comtech (the “Merger”); (iii) the right to receive (the “Merger Consideration”), a combination of  (A) $7.18 in cash, without interest, plus (B) 0.08425 of a validly issued, fully paid and nonassessable share of the common stock of Comtech, par value $0.10 per share (the “Comtech Common Stock”), with cash payable in lieu of fractional shares of Comtech Common Stock, subject to applicable withholding taxes, for each ordinary share, par value NIS 0.20 per share, of Gilat (the “Gilat Shares”) held by Gilat’s shareholders as of immediately prior to the effective time of the Merger; and (iv) all other transactions contemplated by the Merger Agreement and related to the Merger, as detailed in Gilat’s proxy statement/prospectus for the General Meeting (collectively, the “Merger Proposal” or “Proposal 1”);
2.
the approval of the purchase of a seven-year “tail” endorsement to Gilat’s current directors’ and officers’ liability insurance policy (“Proposal 2”);
3.
the approval of the payment of a transaction bonus to the Chief Executive Officer of Gilat (“Proposal 3”);
4.
the approval of the payment of a transaction bonus to the Chief Financial Officer of Gilat (“Proposal 4”);
5.
the approval of an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors (“Proposal 5”); and
6.
the reelection of Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board for an additional three-year term or until his prior termination or resignation (“Proposal 6”).
 

 
GILAT’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE MERGER PROPOSAL AND THE OTHER PROPOSALS ON THE AGENDA.
Gilat cannot complete the Merger unless its shareholders approve the Merger Proposal (Proposal 1). However, the completion of the Merger is not contingent on the approval of Proposals 2, 3, 4, 5 or 6 above.
Shareholders Entitled to Vote
Shareholders of record who held Gilat Shares at the close of business on April 8, 2020 (the “Record Date”), are entitled to notice of, and to vote at, the General Meeting.
Shareholders registered in Gilat’s shareholders registry and shareholders who hold shares through members of the Tel Aviv Stock Exchange Ltd. (the “TASE”) may vote through the enclosed form of proxy by completing, signing, dating and mailing the proxy with a copy of their identity card, passport or certificate of incorporation, as the case may be, to Gilat’s offices. Shareholders who hold shares through members of the TASE and intend to vote their shares either in person or by proxy must deliver to Gilat an ownership certificate confirming their ownership of the Gilat Shares on the Record Date, which must be certified by a recognized financial institution, as required by the Israeli Companies Regulations (Proof of Ownership of Shares for Voting at General Meeting) of 2000, as amended.
Alternatively, shareholders who hold shares through members of the TASE may vote electronically via the electronic voting system of the Israel Securities Authority up to six hours before the time fixed for the General Meeting. You should receive instructions about electronic voting from the TASE member through which you hold your shares.
In addition, shareholders who, as of the Record Date, held Gilat Shares through a bank, broker or other nominee which is a shareholder of record of Gilat or which appears in the participant list of a securities depository, are considered to be beneficial owners of shares held in “street name.” These proxy materials are being forwarded to beneficial owners by your bank, broker or other nominee that is considered the holder of record. Beneficial owners have the right to direct how their shares should be voted and are also invited to attend the General Meeting, but may not actually vote their shares in person at the General Meeting. For those beneficial owners, the bank, broker or other nominee that is a shareholder of record has enclosed a voting instruction card for you to use in directing the holder of record how to vote the shares.
As of March 30, 2020, there were 55,493,258 Gilat Shares issued, outstanding and entitled to one vote each upon each of the matters to be presented at the General Meeting.
Quorum
A quorum must be present in order for the General Meeting to be held. Pursuant to Gilat’s Articles of Association, the quorum required for the General Meeting consists of at least two shareholders present, in person or by proxy, who hold or represent between them more than 25% of Gilat’s issued and outstanding share capital. Broker non-votes and abstentions will be counted as present at the General Meeting for the purpose of determining whether a quorum is present. A broker non-vote occurs when a bank, broker or other nominee holding Gilat Shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions from the beneficial owner. While counted for quorum purposes, abstentions and broker non-votes will not be treated as voting shares and will not have any effect on whether the requisite vote is obtained for all matters placed before shareholders for their vote. None of the proposals at the General Meeting allow for discretionary voting by banks, brokers or other nominees. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall be adjourned to May 15, 2020, at the same time and place. At such adjourned meeting, the presence of at least two shareholders in person or by proxy (regardless of the voting power possessed by their shares) will constitute a quorum.
Vote Required
The approval of the Merger Proposal requires the affirmative vote of holders of a majority of the Gilat Shares present, in person or by proxy, and voting on the Merger Proposal (not taking into consideration
 

 
abstentions), excluding any Gilat Shares that are held by Merger Sub, Comtech or by any person or entity holding at least 25% of the “means of control” (within the meaning of the ICL) of either Merger Sub or Comtech, or any person or entity acting on behalf of either Merger Sub or Comtech or any person or entity described in the previous clause, including any of their affiliates. Under the Merger Agreement, Comtech has represented that it does not own directly or indirectly any Gilat Shares and based on the public filings of Comtech and its stockholders, as of the Record Date, no stockholder of Comtech holds 25% or more of the common stock of Comtech or any other kind of means of control of Comtech.
The approval of each of the other proposals requires the affirmative vote of a majority of the Gilat Shares present, in person or by proxy, and voting on such proposal (not taking into consideration abstentions). In addition, in order to approve each of  (A) Proposal 2 (the purchase of the “tail” endorsement to the D&O liability insurance policy); (B) Proposal 3 (the payment of a transaction bonus to the Chief Executive Officer of Gilat); (C) Proposal 4 (the payment of a transaction bonus to the Chief Financial Officer of Gilat); (D) Proposal 5 (the approval of an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors); and (E) Proposal 6 (the reelection of Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board), the shareholders’ approval must either (i) include at least a majority of the Gilat Shares voted by shareholders who are not controlling shareholders (within the meaning of the ICL) and who are not shareholders who have a personal interest (within the meaning of the ICL) in the approval of such proposal (excluding, in the case of Proposal 6, a personal interest that is not related to a relationship with the controlling shareholders), not taking into consideration abstentions, or (ii) be obtained such that the total Gilat Shares of non-controlling shareholders and non-interested shareholders voted against such proposal do not represent more than two percent of the outstanding Gilat Shares.
Under the ICL, in general, a person will be deemed to be a “controlling shareholder” if the person has the power to direct the activities of Gilat, other than solely as a result of serving as a director or officer of Gilat. A person is presumed to be a controlling shareholder if it holds (i) 50% or more of any type of means of control (as defined under the ICL) in Gilat, or (ii) 25% or more of the voting rights in Gilat, if no other person holds more than 50% of the voting rights in Gilat. As of the date hereof, the FIMI Funds (as defined herein) are considered a controlling shareholder of Gilat.
Under the ICL, a person is deemed to have a “personal interest” in the Merger Proposal if this person, or certain members of this person’s family or a company that is affiliated with this person or with such members of this person’s family (namely, a company in which this person or any such family member serves as a director or chief executive officer, has the right to appoint a director or the chief executive officer, or owns 5% or more of the outstanding shares) has a personal interest in the adoption of such proposal. However, a person is not deemed to have a “personal interest” if this person’s interest arises solely from this person’s ownership of the Gilat Shares. The term “personal interest” also includes a personal interest of an individual voting via a power of attorney given by a third party (even if the empowering shareholder has no personal interest), and the vote of an attorney-in-fact shall be considered a personal interest vote if the empowering shareholder has a personal interest, in each case regardless of whether the attorney-in-fact has the discretion in the voting.
The enclosed form of proxy card requires you to certify that you are not a controlling shareholder of Gilat, do not have a personal interest in (A) Proposal 2 (the purchase of the “tail” endorsement to the D&O liability insurance policy); (B) Proposal 3 (the payment of a transaction bonus to the Chief Executive Officer of Gilat); (C) Proposal 4 (the payment of a transaction bonuses to the Chief Financial Officer of Gilat); (D) Proposal 5 (the approval of an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors); and (E) Proposal 6 (the reelection Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board; and, with respect to Proposal 1, are not a shareholder listed in Section 320(c) of the ICL (i.e., you are neither Merger Sub nor do you own directly or indirectly through Comtech, 25% or more of the ordinary shares or other kind of means of control of Merger Sub). To make this certification with respect to Proposals 1 through 6, check the box “YES” in Items 1A, 2A, 3A, 4A, 5A and 6A, respectively, in the enclosed proxy card.
Each Gilat Share is entitled to one vote on each proposal or item that comes before the General Meeting. If two or more persons are registered as joint owners of any Gilat Share, the right to attend the General Meeting shall be conferred upon all of the joint owners, but the right to vote at the General Meeting
 

 
and/or the right to be counted as part of the quorum required for the General Meeting shall be conferred exclusively upon the senior among the joint owners attending the General Meeting, in person or by proxy, and for this purpose seniority shall be determined by the order in which the names stand on Gilat’s Shareholder Register.
Only Gilat Shares that are voted will be counted towards determining whether the Merger Proposal or the other applicable agenda matter is approved by shareholders. Gilat Shares present at the General Meeting that are not voted on a particular proposal or Gilat Shares present by proxy where the shareholder properly withheld authority to vote on such proposal (including broker non-votes) will not be counted in determining whether such matter is approved by shareholders, but will be counted for purposes of determining whether a quorum exists.
Proposed Resolutions
It is proposed that the following resolutions be adopted at the General Meeting:
Proposal 1:   “RESOLVED, to approve (i) the Agreement and Plan of Merger dated as of January 29, 2020 (as it may be amended from time to time, the “Merger Agreement”) by and among Gilat, Comtech Telecommunications Corp., a Delaware corporation (“Comtech”), and Convoy Ltd., a company organized under the laws of the State of Israel and a wholly-owned subsidiary of Comtech (“Merger Sub”); (ii) the merger of Merger Sub with and into Gilat in accordance with Sections 314-327 of the Israeli Companies Law, 5759-1999 (the “ICL”), following which Merger Sub will cease to exist as a separate legal entity and Gilat will become a wholly-owned subsidiary of Comtech (the “Merger”); (iii) the right to receive (the “Merger Consideration”), a combination of  (A) $7.18 in cash, without interest, plus (B) 0.08425 of a validly issued, fully paid and nonassessable share of the common stock of Comtech, par value $0.10 per share (the “Comtech Common Stock”), with cash payable in lieu of fractional shares of Comtech Common Stock, subject to applicable withholding taxes, for each ordinary share, par value NIS 0.20 per share, of Gilat (the “Gilat Shares”) held by Gilat’s shareholders as of immediately prior to the effective time of the Merger; and (iv) all other transactions contemplated by the Merger Agreement and related to the Merger, as detailed in Gilat’s proxy statement/prospectus for the General Meeting (collectively, the “Merger Proposal”).”
Proposal 2:   RESOLVED, to approve the purchase of a seven-year “tail” endorsement to Gilat’s current directors’ and officers’ liability insurance policy, as described in Proposal 2 of the proxy statement/​prospectus”;
Proposal 3:   RESOLVED, to approve the payment of a transaction bonus to the Chief Executive Officer of Gilat, as described in Proposal 3 of the proxy statement/prospectus”;
Proposal 4:   RESOLVED, to approve the payment of a transaction bonus to the Chief Financial Officer of Gilat, as described in Proposal 4 of the proxy statement/prospectus”;
Proposal 5:   RESOLVED, to approve an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors, as described in Proposal 5 of the proxy statement/prospectus”; and
Proposal 6:   RESOLVED, to reelect Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board, for an additional three-year term or until his prior termination or resignation.”
Gilat’s Board of Directors unanimously recommends a vote “FOR” approval of each of the proposed resolutions.
Gilat cannot complete the Merger unless its shareholders approve the Merger Proposal (Proposal 1). However, the completion of the Merger is not contingent on the approval of Proposals 2, 3, 4, 5 or 6 above.
Proxies
All Gilat Shares represented by properly executed proxies received by Gilat no later than four (4) hours prior to the General Meeting and not revoked prior to or at the General Meeting in accordance with the
 

 
procedure described below will be voted as specified in the instructions indicated in such proxies. If no instructions are indicated, such proxies will not be voted at the General Meeting.
Revocation of Proxies
A shareholder returning a proxy may revoke it at any time prior to commencement of the General Meeting by communicating such revocation in writing to Gilat or by executing and delivering a later-dated proxy. In addition, any person who has executed a proxy and is present at the General Meeting may vote in person instead of by proxy, thereby canceling any proxy previously given, whether or not written revocation of such proxy has been given. Any written notice revoking a proxy should be sent to Gilat at its principal executive offices located at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel, Attention: Chief Financial Officer. Attendance without voting at the General Meeting will not in and of itself constitute revocation of a proxy.
Solicitation of Proxies
Gilat will bear the costs of solicitation of proxies for the General Meeting. In addition to solicitation by mail, Gilat’s directors, officers and employees may solicit proxies from shareholders by telephone, email, personal interview or otherwise. Gilat’s directors, officers and employees will not receive additional compensation for such solicitation, but may be reimbursed for out-of-pocket expenses in connection with such solicitation. Brokers, nominees, fiduciaries and other custodians have been requested to forward soliciting material to the beneficial owners of Gilat Shares held of record by them, and such custodians will be reimbursed for their reasonable expenses. Gilat may reimburse the reasonable charges and expenses of brokerage houses or other nominees or fiduciaries for forwarding proxy materials to, and obtaining authority to execute proxies from, beneficial owners for whose accounts they hold Gilat Shares.
As a foreign private issuer, Gilat is exempt, among other things, from the rules under the Securities Exchange Act of 1934, as amended, related to the furnishing and content of proxy statements. The circulation of this notice and proxy statement/prospectus should not be taken as an admission that Gilat is subject to such rules.
 

 
REFERENCES TO ADDITIONAL INFORMATION
This proxy statement/prospectus incorporates by reference important business and financial information about Comtech and Gilat from other documents that are not included in or delivered with this proxy statement/​prospectus. For a listing of the documents incorporated by reference into this proxy statement/prospectus, see “Where You Can Find More Information.”
You can obtain any of the documents incorporated by reference into this proxy statement/prospectus without charge by requesting them in writing as follows:
Comtech documents:
Comtech Telecommunications Corp.
68 South Service Road, Suite 230,
Melville, NY, 11747
Attn: Investor Relations
Gilat documents:
Gilat Satellite Networks Ltd.
Gilat House, 21 Yegia Kapayim Street
Kiryat Arye, Petah Tikva 49130, Israel
Attn: Investor Relations
To receive timely delivery of the documents in advance of the Gilat General Meeting, you should make your request no later than May 1, 2020, which is five business days before the Gilat General Meeting.
You may also obtain copies of all documents incorporate by reference into this proxy statement/​prospectus without charge through the SEC’s website (www.sec.gov). In addition, you may obtain copies of documents filed by Comtech with the SEC on Comtech’s Investor Relation page on Comtech’s website at www.comtechtel.com or copies of documents filed by Gilat with the SEC on Gilat’s Investor Relations page on Gilat’s website at www.Gilat.com.
We are not incorporating the contents of the websites of the SEC, Comtech, Gilat or any other entity into this proxy statement/prospectus. We are providing the information about how you can obtain certain documents that are incorporated by reference into this proxy statement/prospectus at these websites only for your convenience.
 

 
ABOUT THIS PROXY STATEMENT/PROSPECTUS
This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the U.S. Securities and Exchange Commission (the “SEC”) by Comtech, constitutes a prospectus of Comtech under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) with respect to the shares of Comtech Common Stock to be issued to Gilat shareholders pursuant to the Merger Agreement. This proxy statement/prospectus also constitutes a notification with respect to the extraordinary general meeting of Gilat shareholders.
You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/​prospectus is dated April 3, 2020. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any other date. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither our making available this proxy statement/prospectus to Gilat shareholders nor the issuance by Comtech of shares of common stock pursuant to the Merger Agreement will create any implication to the contrary.
This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation. Information contained in this proxy statement/prospectus regarding Comtech has been provided by Comtech and information contained in this proxy statement/prospectus regarding Gilat has been provided by Gilat.
All references in this proxy statement/prospectus to “Comtech” refer to Comtech Telecommunications Corp., a Delaware corporation; all references in this proxy statement/prospectus to “Gilat” refer to Gilat Satellite Networks Ltd., a company organized under the laws of the State of Israel; all references to “Merger Sub” refer to Convoy Ltd., a company organized under the laws of the State of Israel and a wholly-owned subsidiary of Comtech formed for the sole purpose of effecting the Merger, or its permitted assignees; unless otherwise indicated or as the context requires, all references in this proxy statement/prospectus to “we,” “our” and “us” refer to Comtech and Gilat collectively; unless otherwise indicated or as the context requires, all references to the “combined company” refer to Comtech, Gilat and their subsidiaries, collectively, following the consummation of the Merger; unless otherwise indicated or as the context requires, all references to the “Merger Agreement” refer to the Agreement and Plan of Merger, dated as of January 29, 2020 among Comtech, Merger Sub and Gilat, a copy of which is attached to this proxy statement/prospectus as Annex A; all references to the “Merger” refer to the merger of Merger Sub with and into Gilat, with Gilat as the surviving company.
 

 
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QUESTIONS AND ANSWERS
The following are some questions that you, as a shareholder of Gilat, may have regarding the Merger Proposal being considered at the extraordinary general meeting of Gilat shareholders (the “General Meeting”) and the answers to those questions. Comtech and Gilat urge you to carefully read the remainder of this proxy statement/prospectus because the information in this section does not provide all the information that might be important to you with respect to the Merger Proposal being considered at the General Meeting. Additional important information is also contained in the annexes to, and the documents incorporated by reference into, this proxy statement/prospectus. For more information, see “Where You Can Find More Information.”
Q:
Why am I receiving this proxy statement/prospectus?
A:
Comtech, Gilat and Merger Sub have agreed to a merger of Merger Sub with and into Gilat, with Gilat continuing as the surviving company, under the terms of the Merger Agreement that is described in this proxy statement/prospectus. A copy of the Merger Agreement is attached to this proxy statement/​prospectus as Annex A. The Merger Agreement is the legal document governing the Merger.
In order to consummate the Merger, Gilat shareholders must vote to approve and adopt the Merger Proposal described in this proxy statement/prospectus, and all other conditions to the Merger must be satisfied or waived.
Gilat will hold the General Meeting to obtain this approval for the Merger Proposal. This proxy statement/​prospectus contains important information about the Merger, the Merger Proposal and the General Meeting, and you should read it carefully. The enclosed proxy materials allow you to vote your shares without attending the General Meeting.
Your vote is important. We encourage you to vote as soon as possible. For more information on how to vote your shares, see “The Gilat Extraordinary General Meeting — Voting Procedures.”
Q:
What is a proxy?
A:
A proxy is another person you authorize to vote on your behalf. Gilat is asking its shareholders to vote, or to instruct their proxy how to vote, their Gilat ordinary shares (the “Gilat Shares”) so that all Gilat Shares may be voted at the General Meeting even if the holders do not attend the General Meeting.
Q:
When were the enclosed solicitation materials first made available to shareholders?
A:
The enclosed solicitation materials were first made available to Gilat shareholders on or about April 9, 2020.
Q:
What do I need to do now?
A:
After you have carefully read and considered the information contained in or incorporated by reference into this proxy statement/prospectus, please either join us at the General Meeting to vote in person or vote by submitting your proxy card by following the instructions in “The Gilat Extraordinary General Meeting — Vote Required at the Meeting,” and “The Gilat Extraordinary General Meeting — Voting Procedures.”
Questions and Answers about the Merger Proposal and Extraordinary General Meeting
Q:
When and where is the General Meeting?
A:
The General Meeting will be held on May 8, 2020 at 12:00 p.m., Israel time, at Gilat’s principal executive offices at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel.
In light of the recent outbreak of the coronavirus (COVID-19) pandemic, Gilat reserves the option to convert the General Meeting from a physical meeting to a virtual meeting at a later date. In such event,
 
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Gilat will issue a press release and furnish a Form 6-K or other document with the SEC prior to the date of the General Meeting outlining the manner in which shareholders may attend the virtual meeting.
Q:
Who is entitled to vote at the General Meeting?
A:
Only Gilat shareholders with Gilat Shares registered in his, her, its or their name or names as of the close of trading on April 8, 2020, the record date (“Gilat shareholders of record”), will be entitled to vote at the General Meeting or at any adjournment thereof. As of March 30, 2020, Gilat had 55,493,258 outstanding Gilat Shares, each of which is entitled to one vote upon the matter presented at the General Meeting.
Q:
What proposals will be considered at the General Meeting?
A:
At the General Meeting, you will be asked to consider and vote on the following:

the approval of  (i) the Merger Agreement; (ii) the Merger; (iii) the Merger Consideration; and (iv) all other transactions contemplated by the Merger Agreement and related to the Merger, as detailed in Gilat’s proxy statement/prospectus for the General Meeting (collectively, the “Merger Proposal” or “Proposal 1”);

the approval of the purchase of a seven-year “tail” endorsement to Gilat’s current directors’ and officers’ liability insurance policy (“Proposal 2”);

the approval of the payment of a transaction bonus to the Chief Executive Officer of Gilat (“Proposal 3”);

the approval of the payment of a transaction bonus to the Chief Financial Officer of Gilat (“Proposal 4”);

the approval of an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors (“Proposal 5”); and

the reelection of Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board, for an additional three year term or until his prior termination or resignation (“Proposal 6”).
Gilat cannot complete the Merger unless its shareholders approve the Merger Proposal (Proposal 1). However, the completion of the Merger is not contingent on the approval of Proposals 2, 3, 4, 5, and 6 above.
Q:
What constitutes a quorum?
A:
No less than two Gilat shareholders present in person or by proxy, and holding or representing between them more than 25% of Gilat’s issued and outstanding share capital, shall constitute a quorum at the General Meeting. If within one-half hour from the time appointed for the holding of the General Meeting a quorum is not present, the General Meeting shall be adjourned to May 15, 2020, at the same time and place. At such adjourned meeting, the presence of at least two Gilat shareholders in person or by proxy (regardless of the voting power possessed by their shares) will constitute a quorum.
Broker non-votes and abstentions will be counted as present at the General Meeting for the purpose of determining whether a quorum is present. A broker non-vote occurs when a bank, broker or other nominee holding Gilat Shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions from the beneficial owner. While counted for quorum purposes, abstentions and broker non- votes will not be treated as voting shares and will not have any effect on whether the requisite vote is obtained for all matters placed before shareholders for their vote.
 
v

 
Q:
What vote of Gilat shareholders is required to approve the Merger Proposal and the other proposals to be considered at the General Meeting?
A:
The approval of the Merger Proposal requires the affirmative vote of holders of a majority of the Gilat Shares present, in person or by proxy, and voting on the Merger Proposal (not taking into consideration abstentions) excluding any Gilat Shares that are held by Merger Sub, Comtech or by any person or entity holding at least 25% of the “means of control” (within the meaning of the ICL) of either Merger Sub or Comtech, or any person or entity acting on behalf of either Merger Sub or Comtech or any person or entity described in the previous clause, including any of their affiliates.
The approval of each of the other proposals requires the affirmative vote of a majority of the Gilat Shares present, in person or by proxy, and voting on such proposal (not taking into consideration abstentions). In addition, in order to approve each of  (A) Proposal 2 (the purchase of the “tail” endorsement to the D&O liability insurance policy); (B) Proposal 3 (the payment of a transaction bonus to the Chief Executive Officer of Gilat); (C) Proposal 4 (the payment of a transaction bonus to the Chief Financial Officer of Gilat); (D) Proposal 5 (the approval of an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors); and (E) Proposal 6 (the reelection of Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board), the shareholders’ approval must either (i) include at least a majority of the Gilat Shares voted by shareholders who are not controlling shareholders (within the meaning of the ICL) and who are not shareholders who have a personal interest (within the meaning of the ICL) in the approval of such proposal (excluding, in the case of Proposal 6, a personal interest that is not related to a relationship with the controlling shareholders), not taking into consideration abstentions, or (ii) be obtained such that the total Gilat Shares of non-controlling shareholders and non-interested shareholders voted against such proposal do not represent more than two percent of the outstanding Gilat Shares.
Q:
How does the Gilat Board recommend that I vote?
A:
The Board of Directors of Gilat (the “Gilat Board”) unanimously recommends a vote “FOR” the Merger Proposal and the other proposals to be considered at the General Meeting.
For a discussion of the factors that the Gilat Board considered in determining to recommend the approval and adoption of the Merger Agreement, the Merger and all other transactions contemplated by thereby, see “The Merger — Gilat’s Reasons for the Merger; Recommendation of the Gilat Board.”
Q:
Do any of Gilat’s directors or executive officers have any interests in the Merger that may be different from, or in addition to, my interests as a Gilat shareholder?
A:
In considering the proposal to be voted on at the General Meeting, you should be aware that Gilat’s directors and executive officers have interests that may be different from, or in addition to, the interests of the Gilat shareholders generally. For more information, see “The Merger — Interests of Gilat Directors and Executive Officers in the Merger.”
Q:
What do I need to do now?
A:
After carefully reading and considering the information contained in this proxy statement/prospectus, including the annexes and the other documents incorporated by reference in this proxy statement/​prospectus, please ensure your Gilat Shares are voted at the General Meeting by completing, dating, signing and mailing the enclosed proxy in the envelope provided at your earliest convenience and in any event so as to be received in a timely manner as discussed in this proxy statement/prospectus.
Your Gilat Shares can be voted at the General Meeting only if you are present or represented by a valid proxy. In order to provide for proper counting of your shareholder vote, in the enclosed proxy you are required to certify that you are not a controlling shareholder of Gilat, do not have a personal interest in (A) Proposal 2 (the purchase of the “tail” endorsement to the D&O liability insurance policy); (B) Proposal 3 (the payment of a transaction bonus to the Chief Executive Officer of Gilat); (C) Proposal 4 (the payment of a transaction bonuses to the Chief Financial Officer of Gilat);
 
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(D) Proposal 5 (the approval of an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors); and (E) Proposal 6 (the reelection Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board, and, with respect to Proposal 1, are not a shareholder listed in Section 320(c) of the ICL (i.e., you are neither Merger Sub nor do you own directly or indirectly through Comtech, 25% or more of the ordinary shares or other kind of means of control of Merger Sub). To make this certification with respect to Proposals 1 through 6, check the box “YES” in Items 1A, 2A, 3A, 4A, 5A and 6A, respectively, in the enclosed proxy card.
Q:
What happens if I sell my Gilat Shares before the General Meeting?
A:
The record date for the General Meeting is earlier than the date of the General Meeting. If you own Gilat Shares on the record date and transfer your Gilat Shares after the record date but before the time of the General Meeting, you will retain your right to vote such Gilat Shares at the General Meeting, but the right to receive the Merger Consideration will pass to the person to whom you transferred your Gilat Shares. In order to receive the Merger Consideration, you must hold your Gilat Shares through the completion of the Merger.
Q:
How do I cast my vote if I am a Gilat shareholder of record?
A:
If you are a Gilat shareholder of record, you may vote in person at the General Meeting or by submitting a proxy for the General Meeting. In order for a proxy to be counted, it must be a duly executed proxy and received prior to the General Meeting. This will be deemed to have occurred only if such proxy is received either by Gilat at its principal executive offices at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel, at any time prior to the commencement of the General Meeting (other than proxies that are revoked or superseded before they are voted). If you submit an executed proxy but do not specify how to vote your proxy, your Gilat Shares will not be voted at the General Meeting.
Gilat Shares represented by any proxy received after the times specified above will not be counted as present at the meeting and will not be voted. For more detailed instructions on how to vote, see “The Gilat Extraordinary General Meeting — Vote Required at the Meeting” and “The Gilat Extraordinary General Meeting — Voting Procedures.”
If two or more persons are registered as joint owners of any Gilat Share, the right to attend the General Meeting shall be conferred upon all of the joint owners, but the right to vote at the General Meeting and/or the right to be counted as part of the quorum required for the General Meeting shall be conferred exclusively upon the senior among the joint owners attending the General Meeting, in person or by proxy, and for this purpose seniority shall be determined by the order in which the names stand on Gilat’s Shareholder Register.
Q:
How do I cast my vote if my Gilat Shares are held in “street name” by my broker or through members of the TASE?
A:
If you hold your Gilat Shares in “street name” through a bank, broker or other nominee you should follow the instructions on the form you receive from your bank, broker or other nominee. If your Gilat Shares are held in “street name” and you wish to vote such shares by attending the General Meeting in person, you will need to obtain a proxy from your bank, broker or other nominee. If your Gilat Shares are held in “street name,” you must contact your bank, broker or other nominee to change or revoke your voting instructions.
If you hold your Gilat Shares through members of the TASE, you may vote in person or vote through the proxy card by completing, signing, dating and mailing the proxy card with a copy of your identity card, passport or certificate of incorporation, as the case may be, to Gilat’s offices. If you hold shares through members of the TASE and intend to vote your shares either in person or by proxy, you must deliver to Gilat an ownership certificate confirming your ownership of Gilat Shares on the Record Date, which must be certified by a recognized financial institution, as required by the Israeli Companies Regulations (Proof of Ownership of Shares for Voting at General Meeting) of 2000, as amended.
 
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Alternatively, if you hold shares through members of the TASE, you may vote electronically via the electronic voting system of the Israel Securities Authority (the “ISA”) up to six hours before the time fixed for the General Meeting. You should receive instructions about electronic voting from the TASE member through which you hold your shares.
Q:
What will happen if I abstain from voting on the Merger Proposal or any of the other proposals to be considered at the General Meeting?
A:
Proxies submitted with instructions to abstain from voting and broker non-votes will not be considered to be votes “FOR” or “AGAINST” the Merger Proposal or any other proposal and will have no effect on the result of the vote.
Q:
Can I change my vote after I have delivered my proxy?
A:
You may revoke your proxy at any time before the vote is taken at the General Meeting by (a) delivering to Gilat at its principal executive offices located at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel, Attention: Chief Financial Officer, a written notice of revocation, bearing a later date than the proxy, stating that the proxy is revoked, (b) by properly submitting a later-dated proxy relating to the same Gilat Shares or (c) by attending the General Meeting and voting in person (although attendance at the General Meeting will not, by itself, revoke a proxy). Gilat Shares represented by properly executed proxies received by us no later than four (4) hours prior to the General Meeting will, unless such proxies have been previously revoked or superseded, be voted at the General Meeting in accordance with the directions on the proxies. Written notices of revocation and other communications concerning the revocation of a previously executed proxy should be addressed to us at our principal executive offices located at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel, Attention: Chief Financial Officer.
If your Gilat Shares are held in “street name,” you must contact your bank, broker or other nominee to change or revoke your voting instructions. Please note that if you hold Gilat Shares through a TASE member and you voted electronically via the electronic voting system of the ISA, you may change or revoke your vote using the electronic voting system up to the time by which you may submit your vote using such system (i.e., up to six hours prior to the scheduled time of the General Meeting).
Q:
If I hold my Gilat Shares in certificated form, should I send in my share certificates now?
A:
No. Following the Effective Time, American Stock Transfer & Trust Company, LLC, the exchange agent, will mail to each Gilat shareholder, other than holders of Gilat Shares issued upon exercise of Gilat Options granted under Section 102 of the Israeli Income Tax Ordinance [New Version], 1961, as amended (the “Gilat 102 Shares” and the “ITO,” respectively), certain instructions regarding surrendering the Gilat Shares whether they are certificated or not and making required certifications of the applicability of tax withholding. Options to purchase Gilat Shares (the “Gilat Options”), other than Gilat Options which were granted under Section 102 of the ITO (the “Gilat 102 Options”), that are being cancelled and converted into Merger Consideration will be processed through payroll. Holders of Gilat 102 Shares and Gilat 102 Options or other equity held by the 102 Trustee will receive instructions from the 102 Trustee.
If you are a Gilat shareholder with Gilat Shares held in “street name,” which means your Gilat Shares are held in an account at a broker, bank or other nominee, you will receive instructions from your broker, bank or other nominee. If you are a Gilat shareholder with Gilat Shares held through members of the TASE, you will receive instructions from the applicable TASE member. For further information, see “Merger Agreement — Exchange Agent; Letter of Transmittal.”
Q:
Am I entitled to exercise dissenters’ rights or appraisal rights instead of receiving the Merger Consideration for my Gilat Shares?
A:
No. Under Israeli law, holders of Gilat Shares are not entitled to statutory appraisal rights in connection with the Merger.
 
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Questions and Answers about the Merger
Q:
What will happen in the Merger?
A:
Under the terms of the Merger Agreement, Merger Sub will merge with and into Gilat, with Gilat continuing as the surviving company and as a wholly-owned subsidiary of Comtech. After the Merger, Gilat will no longer be a publicly held corporation.
Q:
What is required to complete the Merger?
A:
Each of Comtech’s and Gilat’s obligation to consummate the Merger is subject, as relevant, to a number of conditions specified in the Merger Agreement, including the following:

approval of the Merger Agreement, the Merger and the other transactions contemplated thereby by Gilat shareholders as described in this proxy statement/prospectus;

obtaining all required governmental authorizations, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”);

clearance or approval by antitrust or competition authorities in Russia;

the absence of a material adverse effect (as such term is defined in the Merger Agreement) with respect to Gilat and Comtech from the date of the Merger Agreement;

the SEC declaring effective this registration statement on Form S-4;

the shares of Comtech Common Stock to be issued in the Merger being approved for listing on the Nasdaq Global Select Market (“Nasdaq”);

the expiration of certain statutory waiting periods under the ICL;

the obtainment of the ISA Exemptions (as such term is defined in the Merger Agreement);

the accuracy of the representations and warranties of each party (subject to certain materiality standards); and

the material compliance by each party with its obligations under the Merger Agreement.
The consummation of the Merger is not subject to a financing condition. For more information, see “The Merger Agreement — Conditions to Completion of the Merger” as well as the copy of the Merger Agreement attached to this proxy statement/prospectus as Annex A and incorporated herein by reference.
Q:
Is the consummation of the Merger conditioned on the approval of the Merger Agreement by Comtech’s stockholders?
A:
No. The consummation of the Merger is not conditioned on the approval of the Merger Agreement by Comtech’s stockholders.
Q:
When do you expect the Merger to be completed?
A:
Comtech and Gilat expect the closing of the Merger (the “Closing”) to occur in the second or third quarter of the 2020 calendar year (such date that the Closing occurs, the “Closing Date”). However, the Merger is subject to various regulatory approvals and the satisfaction or waiver of other conditions, and it is possible that factors outside the control of Comtech and Gilat could result in the Merger being completed at an earlier time, a later time or not at all. There may be a substantial amount of time between the date on which the General Meeting is held and the date of the completion of the Merger. The Merger will become effective following the satisfaction or waiver of the conditions to Closing upon the issuance by the Companies Registrar of the State of Israel (the “Israeli Companies Registrar”) of a certificate of merger (the “Effective Time”).
 
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Q:
In the Merger, what will Gilat shareholders receive for their shares?
A:
If the Merger is consummated, each Gilat Share that is issued and outstanding immediately prior to the Effective Time will be cancelled and extinguished and automatically converted into the right to receive a combination of  (A) $7.18 in cash, without interest, plus (B) 0.08425 of a validly issued, fully paid and nonassessable share of the common stock of Comtech, par value $0.10 per share (the “Comtech Common Stock”), with cash payable in lieu of fractional shares of Comtech Common Stock, subject, in each case, to applicable withholding taxes. For more information, see “The Merger Agreement — Merger Consideration.”
Q:
What is the value of the Merger Consideration per share?
A:
The exact value of the Merger Consideration will depend on the price per share at which Comtech Common Stock trades at the Effective Time. Such price will not be known at the time of the General Meeting and may be less than the current price of the Comtech Common Stock or its price at the time of the General Meeting. Based on the closing stock price of Comtech Common Stock on January 28, 2020, the last trading day before public announcement of the Merger, of  $37.10, and assuming that the price of Comtech Common Stock at the Effective Time of the Merger is the same as it was on January 28, 2020, the value of the Merger Consideration per share would be $10.31 for each Gilat Share. The market prices of shares of Comtech Common Stock and Gilat Shares are subject to fluctuation, and the price of Comtech Common Stock at the Effective Time may be higher or lower than it was on January 28, 2020, on the date of this proxy statement/prospectus or on the date of the General Meeting. We urge you to obtain current market quotations of Comtech Common Stock and Gilat Shares. For more information, see “Where You Can Find More Information” and “Summary — Unaudited Comparative Per Share Market Value and Dividend Information.”
Q:
After the Merger, how much of Comtech will Gilat shareholders own?
A:
Based on the number of Gilat Shares issued and outstanding as of March 30, 2020, the number of shares of Comtech Common Stock issued and outstanding as of March 30, 2020, the number of vested Gilat Options outstanding as of March 30, 2020, and assuming a Comtech Average Trading Price of $18.07 (calculated based on the volume-weighted average of the trading prices of Comtech Common Stock for the ten (10) most recent trading days ending on (and including) the second-to-last trading day immediately prior to the Effective Time), it is expected that, immediately after completion of the Merger, former Gilat shareholders will receive shares of Comtech Common Stock in the Merger representing approximately 16.0% of the outstanding shares of Comtech Common Stock immediately following the Effective Time.
Q:
Will Gilat shareholders be able to trade the shares of Comtech Common Stock that they receive in the transaction?
A:
Yes. Shares of Comtech Common Stock are listed on Nasdaq under the symbol “CMTL.” Shares of Comtech Common Stock received in exchange for Gilat Shares in the Merger will be freely transferable under U.S. federal securities laws.
Q:
What will happen to my outstanding Gilat Options in the Merger?
A:
For information regarding the treatment of the Gilat Options, see “The Merger Agreement — Treatment of Gilat Options.”
Q:
How will I receive the Merger Consideration to which I am entitled?
A:
After receiving the proper documentation from holders of Gilat Shares, subject to the terms and conditions set forth in the Merger Agreement, the exchange agent in the transaction will transfer to such holders the cash and the shares of Comtech Common Stock to which such holders are entitled. Gilat shareholders will not receive any fractional shares of Comtech Common Stock and will instead receive cash in lieu of any such fractional shares.
 
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Holders of Gilat 102 Options that are not being assumed by Comtech and converted into Comtech restricted stock units, will receive the Merger Consideration to which such holders are entitled through the 102 Trustee (as described in “The Merger Agreement — Exchange Agent; Letter of Transmittal”), in accordance with the terms and conditions of Section 102 of the ITO and the Tax Rulings (as defined below in the answer to the question “What are the Israeli tax consequences of the exchange of Gilat Shares for the Merger Consideration?”).
Holders of Gilat Options (other than Gilat 102 Options) that are not being assumed by Comtech and converted into Comtech restricted stock units, will receive the Merger Consideration to which such holders are entitled from Gilat or, if applicable, a relevant engaging subsidiary, through its payroll system, subject to applicable withholdings.
More information on the documentation required to be delivered to the exchange agent may be found in “Material Israeli Tax Consequences.”
Q:
Do I need to do anything with my certificates representing Gilat Shares now?
A:
No. After the Merger is consummated, if you held certificates representing Gilat Shares prior to the Merger, the exchange agent will send you instructions for exchanging your Gilat Shares for the Merger Consideration.
Q:
What happens if the Merger is not completed?
A:
If the Merger Proposal is not approved by Gilat shareholders or if the Merger is not completed for any other reason, Gilat shareholders will not receive the Merger Consideration in exchange for their Gilat Shares. Instead, Gilat will remain a stand-alone public company and Gilat Shares will continue to be listed and traded on Nasdaq and TASE. Under specified circumstances, Gilat may be required to pay Comtech a termination fee, as described in “The Merger Agreement — Termination Fees.”
Q:
What are the U.S. federal income tax consequences of the exchange of Gilat Shares for the Merger Consideration?
A:
The exchange of your Gilat Shares for cash and shares of Comtech Common Stock in the Merger will be a taxable transaction for U.S. federal income tax purposes. Accordingly, for U.S. federal income tax purposes, if you are a U.S. Holder (as defined in “Material U.S. Federal Income Tax Consequences of the Merger”), you generally will recognize: (a) gain equal to the amount by which the sum of the amount of cash and the fair market value of the shares of Comtech Common Stock you receive in the Merger exceeds your tax basis in the Gilat Shares that you surrender in the Merger; or (b) loss equal to the amount by which your tax basis in the Gilat Shares that you surrender in the Merger exceeds the sum of the amount of cash and the fair market value of the shares of Comtech Common Stock you receive in the Merger. If you are a Non-U.S. Holder (as defined in “Material U.S. Federal Income Tax Consequences of the Merger”), you generally will not be subject to U.S. federal income tax on any gain recognized as a result of the Merger.
A holder may be subject to special circumstances or rules. Each holder should consult its own tax advisors concerning the U.S. federal income tax consequences relating to the Merger in light of its particular circumstances and any consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction. A more complete description of the material U.S. federal income tax consequences of the Merger is provided in the “Material U.S. Federal Income Tax Consequences of the Merger.”
Q:
What are the Israeli tax consequences of the exchange of Gilat Shares for the Merger Consideration?
A:
The following statements are only a summary of certain material Israeli tax consequences of the Merger.
As a consequence of the Merger, holders of Gilat Shares will be treated as having sold their Gilat Shares in the Merger. When an Israeli company is sold, regardless of whether the consideration in the sale is cash or stock, its shareholders are generally subject to Israeli taxation.
 
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The ITO distinguishes between ‘Real Capital Gain’ and ‘Inflationary Surplus’. The Inflationary Surplus is the portion of the total capital gain which is equivalent to the increase of the relevant asset’s purchase price which is attributable to the increase in the Israeli CPI or, in certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of sale. The Real Capital Gain is the excess of the total capital gain over the Inflationary Surplus.
The capital gains tax rate applicable to the Real Capital Gain is 25% for individuals (and if such individual is holding or is entitled to purchase, directly or indirectly, alone or together with such person’s relative or another person who collaborates with such person on a permanent basis, one of the following: (i) at least 10% of the issued and outstanding Gilat Shares, (ii) at least 10% of the voting rights of Gilat, (iii) the right to receive at least 10% of Gilat’s profits or its assets upon liquidation, (iv) the right to appoint a manager/director, or (v) the right to instruct any other person to do any of the foregoing (a “Major Stockholder”) on the date of sale or on any date falling within the 12-month period preceding that date of sale, such Major Stockholder would be subject to Israeli taxation at the rate of 30%) and 23% for corporations. An additional tax at a rate of three percent on the Real Capital Gain may be imposed upon individual shareholders whose annual income from all sources that is taxable in Israel exceeds a certain amount. The Inflationary Surplus is generally exempt from tax, provided that the shares being sold were acquired after December 31, 1993.
Shareholders of a company, such as Gilat, whose shares are traded on the Tel Aviv Stock Exchange or on a regulated market outside of Israel, who are non-Israeli residents and purchased their shares after the listing of Gilat’s shares on the TASE or said regulated market outside of Israel, whichever is earlier (which means, in the case of Gilat, non-Israeli residents who purchased Gilat Shares after March 26, 1993), would generally be exempt from Israeli capital gains tax, provided that certain conditions are met (e.g., including that the capital gain is not made through a permanent establishment that the non-Israeli resident shareholder maintains in Israel). In addition, such sale may be exempt from Israeli capital gain tax (or be subject to a reduced tax rate) under the provisions of an applicable tax treaty between Israel and the seller’s country of residence (subject to the receipt of a valid certificate from the Israel Tax Authority allowing for an exemption or a reduced tax rate).
Gilat has requested tax rulings from the Israel Tax Authority with respect to (i) exemption from withholding of Israeli tax on payments of Merger Consideration payable to Gilat shareholders who are non-Israeli residents and meet certain conditions, (ii) deferral of the obligation of Israeli tax resident holders of Gilat Shares, to pay Israeli tax on the exchange of the Gilat Shares for Comtech common stock in accordance with the provisions of Section 104H of the ITO and (iii) the application of Israeli tax withholding and other Israeli tax treatment applicable to holders of Gilat Options and shares issued to certain directors and employees under Section 102 of the ITO and to certain directors and others under Section 3(i) of the ITO (collectively, the “Tax Rulings”). If and when the tax rulings are finalized, Gilat will issue a press release and furnish a Form 6-K or other document with the SEC describing the scope of the exemptions provided by the rulings. There can be no assurance that such rulings will be granted before the Closing or at all or that, if obtained, such rulings will be granted under the conditions requested by Gilat.
Whether or not a particular Gilat shareholder is actually subject to Israeli capital gains tax in connection with the Merger, absent receipt by Gilat of a tax ruling from the Israel Tax Authority prior to Closing, all Gilat shareholders will be subject to Israeli tax withholding at the rate of 25% (for individuals) and 23% (for corporations) on the gross Merger Consideration (unless the shareholder requests and obtains an individual certificate of exemption or a reduced tax rate from the Israel Tax Authority, as described below), and Comtech or the exchange agent will withhold and deduct from the Cash Merger Consideration an amount equal to 25%, 23% or such other reduced tax rate as stipulated in the certificate obtained, as applicable, of the gross Merger Consideration received by such shareholder.
Regardless of whether Gilat obtains the requested tax rulings from the Israel Tax Authority, any holder of Gilat Shares who believes that it is entitled to such an exemption (or reduced tax rate) may separately apply to the Israel Tax Authority to obtain a certificate of exemption from withholding or an individual tax ruling providing for no withholding or withholding at a reduced rate, and submit such certificate of exemption or ruling to the exchange agent at least five business days prior to the date that is 180 days following the Closing Date. If Comtech or the exchange agent receive a valid exemption certificate or
 
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tax ruling (as determined in Comtech’s or the exchange agent’s discretion) at least five business days prior to the date that is 180 days following the Closing Date, then the withholding (if any) of any amounts under the ITO, from the Merger Consideration payable shall be made only in accordance with the provisions of such Israeli tax certificate or tax ruling.
You are urged to consult with your own tax advisor for a full understanding of the tax consequences of the Merger to you, including the consequences under any applicable, state, local, foreign or other tax laws.
For a more detailed description of the material Israeli tax consequences of the Merger, see the section entitled “Material Israeli Tax Consequences.
Q:
Who can help answer my questions?
A:
If you have questions about the Merger or the other matters to be voted on at the General Meeting or desire additional copies of this proxy statement/prospectus or additional proxy cards, you should contact Gilat Satellite Networks Ltd., Yael Shofar, General Counsel and Corporate Secretary, +972-3-925-2000, yaelsh@gilat.com, Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel.
 
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SUMMARY
This summary highlights selected information contained elsewhere in this proxy statement/prospectus and may not contain all the information that is important to you with respect to the Merger Proposal and the other proposals to be considered at the General Meeting. Comtech and Gilat urge you to read the remainder of this proxy statement/prospectus carefully, including the attached annexes, and the other documents to which we have referred you. See also “Where You Can Find More Information.” We have included references in this summary to direct you to more complete descriptions of the topics presented below.
Parties to the Merger
Comtech Telecommunications Corp.
Comtech is a leading provider of advanced communications solutions for both commercial and government customers worldwide. Comtech’s solutions fulfill its customers’ needs for secure wireless communications in some of the most demanding environments, including those where traditional communications are unavailable or cost-prohibitive, and in mission-critical scenarios where performance is crucial. In recent years, Comtech has benefited from an increase in market demand for global voice, video and data usage which has resulted in Comtech growing.
Comtech Common Stock is traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “CMTL.”
The principal executive offices of Comtech are located at 68 South Service Road, Suite 230, Melville, NY, 11747, and its telephone number is (631) 962-7000.
Gilat Satellite Networks Ltd.
Gilat is a leading global provider of satellite-based broadband communications. With 30 years of experience, Gilat designs and manufactures cutting-edge ground segment equipment, and provides comprehensive solutions and end-to-end services, powered by Gilat’s innovative technology. Delivering high value competitive solutions, Gilat’s portfolio includes a cloud based VSAT network platform, high-speed modems, high performance on-the-move antennas and high efficiency, high power Solid State Amplifiers (SSPA) and Block Upconverters (BUC).
Gilat’s comprehensive solutions support multiple applications with a full portfolio of products to address key applications including broadband access, cellular backhaul, enterprise, in-flight connectivity, maritime, trains, defense and public safety, all while meeting the most stringent service level requirements.
Gilat Shares are traded on Nasdaq and the TASE under the symbol “GILT.”
The principal executive offices of Gilat are located at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel, and its telephone number is +972-3-925-2000.
Convoy Ltd.
Merger Sub, a wholly-owned subsidiary of Comtech, is a company organized under the laws of the State of Israel that was formed on January 15, 2020 for the sole purpose of effecting the Merger. It is anticipated that the Merger Sub will be wholly owned by a company to be organized under the laws of the State of Israel (“Holdco”) and that Holdco will be wholly owned by an existing subsidiary of Comtech organized under the laws of the United Kingdom (“UK Holdco”). In the Merger, Merger Sub will be merged with and into Gilat, with Gilat surviving as a wholly-owned subsidiary of Comtech.
The Merger
A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus and is incorporated by reference herein. Comtech and Gilat encourage you to read the entire Merger Agreement carefully, because it is the principal document governing the Merger. For more information on the Merger Agreement, see “The Merger Agreement.”
 
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Structure of the Merger
Immediately prior to the Merger, it is anticipated that Merger Sub will be a directly wholly-owned subsidiary of Holdco, which is to be a directly wholly-owned subsidiary of UK Holdco, which, in turn, is a wholly-owned subsidiary of Comtech. The Merger Agreement provides for the Merger, in which Merger Sub will be merged with and into Gilat, with Gilat surviving the Merger as a wholly-owned subsidiary of Comtech. After the completion of the Merger, the memorandum of association of Gilat as in effect immediately prior to the Effective Time will be the memorandum of association of the Surviving Company (as defined in “The Merger Agreement — The Merger”), until duly amended, and Merger Sub’s articles of association, as in effect immediately prior to the Effective Time will be the articles of association of the Surviving Company except that references to the name of Merger Sub will be replaced by references to the name of the Surviving Company, until duly amended. The individuals holding positions as directors of Merger Sub immediately prior to the Effective Time will become the initial directors of the Surviving Company until their respective successors are duly elected and qualified, or until their resignation or removal. The individuals holding positions as officers of Gilat as of the Effective Time will continue to be the officers of the Surviving Company until their respective successors are duly elected, appointed or qualified, or until their resignation or removal.
Merger Consideration
Each of the Board of Directors of Comtech (the “Comtech Board) and the Gilat Board has approved the Merger Agreement, which provides for the merger of Merger Sub with and into Gilat. Upon the closing of the Merger (the “Closing”), Gilat will be the surviving company and will become a wholly-owned subsidiary of Comtech. Each Gilat Share that is issued and outstanding immediately prior to the Effective Time will be cancelled and extinguished and automatically converted into the right to receive a combination of  (A) $7.18 in cash, without interest, plus (B) 0.08425 of a validly issued, fully paid and nonassessable share of Comtech Common Stock, with cash payable in lieu of fractional shares of Comtech Common Stock, subject, in each case, to applicable withholding taxes.
Financing of the Merger
Comtech expects to fund the acquisition of Gilat and related transaction costs through the use of unrestricted cash and cash equivalents on hand at Closing and drawing on a new credit facility. In connection with the execution of the Merger Agreement, Comtech obtained a debt commitment letter from Citibank, N.A., Manufacturers and Traders Trust Company, Santander Bank, N.A., BMO Harris Bank, N.A. and BMO Capital Markets Corp., Regions Bank, Israel Discount Bank of New York and Goldman Sachs Bank USA (collectively, the “Commitment Parties”), pursuant to which, among other things, the Commitment Parties have committed to provide Comtech with a senior secured credit facility in an aggregate principal amount of  $800,000,000 to finance, in part, the acquisition of Gilat. Comtech expects to finalize the terms of the new credit facility closer to Closing.
Material U.S. Federal Income Tax Consequences of the Merger
The Merger will be a taxable transaction for U.S. federal income tax purposes, with each U.S. Holder in the Merger generally recognizing: (a) gain equal to the amount by which the sum of the amount of cash and the fair market value of the Comtech Common Stock received by the U.S. Holder in the Merger exceeds the U.S. Holder’s tax basis in the Gilat Shares surrendered by the U.S. Holder in the Merger; or (b) loss equal to the amount by which the U.S. Holder’s tax basis in the U.S. Holder’s Gilat Shares surrendered by the U.S. Holder in the Merger exceeds the sum of the amount of cash and the fair market value of the Comtech Common Stock received by the U.S. Holder in the Merger. A Non-U.S. Holder (as defined in “Material U.S. Federal Income Tax Consequences of the Merger”) that exchanges its Gilat Shares for cash and shares of Comtech Common Stock in the Merger generally will not be subject to U.S. federal income tax on any gain.
For more information, see “Material U.S. Federal Income Tax Consequences of the Merger.” Each Gilat shareholder should consult its own tax advisors concerning the U.S. federal income tax consequences relating to the Merger in light of its particular circumstances and any consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction.
 
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Material Israeli Tax Consequences of the Merger
The following statements are only a summary of certain material Israeli tax consequences of the Merger.
As a consequence of the Merger, holders of Gilat Shares will be treated under Israeli tax laws as having sold their Gilat Shares in the Merger.
When an Israeli company is sold, regardless of whether the consideration for the sale of shares is cash or stock, its shareholders are generally subject to Israeli taxation.
The ITO distinguishes between ‘Real Capital Gain’ and ‘Inflationary Surplus’. The Inflationary Surplus is the portion of the total capital gain which is equivalent to the increase of the relevant asset’s purchase price which is attributable to the increase in the Israeli CPI or, in certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of sale. The Real Capital Gain is the excess of the total capital gain over the Inflationary Surplus.
The capital gains tax rate applicable to the Real Capital Gain is 25% for individuals (and if such individual is a Major Stockholder on the date of sale or on any date falling within the 12-month period preceding that date of sale, such Major Stockholder would be subject to Israeli taxation at the rate of 30%) and 23% for corporations. An additional tax at a rate of three percent on the Real Capital Gain may be imposed upon individual shareholders whose annual income from all sources that is taxable in Israel exceeds a certain amount. The Inflationary Surplus is generally exempt from tax, provided that the shares being sold were acquired after December 31, 1993.
Shareholders of a company, such as Gilat, whose shares are traded on the TASE or on a regulated market outside of Israel, who are non-Israeli residents and purchased their shares after the listing of Gilat’s shares on the TASE or said regulated market outside of Israel, whichever is earlier (which means, in the case of Gilat, non-Israeli residents who purchased Gilat Shares after March 26, 1993), would generally be exempt from Israeli capital gains tax, provided that certain conditions are met (e.g., including that the capital gain is not realized through a permanent establishment that the non-Israeli resident shareholder maintains in Israel). In addition, such sale may be exempt from Israeli capital gain tax (or be subject to a reduced tax rate) under the provisions of an applicable tax treaty between Israel and the seller’s country of residence (subject to the receipt of a valid certificate from the Israel Tax Authority allowing for an exemption or a reduced tax rate).
Gilat has requested tax rulings from the Israel Tax Authority with respect to (i) exemption from withholding of Israeli tax on payments of Merger Consideration payable to Gilat shareholders who are non-Israeli residents and meet certain conditions, (ii) deferral of the obligation of Israeli tax resident holders of Gilat Shares, to pay Israeli tax on the exchange of the Gilat Shares for Comtech common stock in accordance with the provisions of Section 104H of the ITO and (iii) the application of Israeli tax withholding and other Israeli tax treatment applicable to holders of Gilat Options and shares issued to certain directors and employees under Section 102 of the ITO and to certain directors and others under Section 3(i) of the ITO. If and when the tax rulings are finalized, Gilat will issue a press release and furnish a Form 6-K or other document with the SEC describing the scope of the exemptions provided by the rulings. There can be no assurance that such rulings will be granted before the Closing or at all or that, if obtained, such rulings will be granted under the conditions requested by Gilat.
Whether or not a particular Gilat shareholder is actually subject to Israeli capital gains tax in connection with the Merger, absent receipt by Gilat of a tax ruling from the Israel Tax Authority prior to Closing, all Gilat shareholders will be subject to Israeli tax withholding at the rate of 25% (for individuals) and 23% (for corporations) on the gross Merger Consideration (unless the shareholder requests and obtains an individual certificate of exemption or a reduced tax rate from the Israel Tax Authority, as described below), and Comtech or the exchange agent will withhold and deduct from the Cash Merger Consideration an amount equal to 25%, 23% or such other reduced tax rate as stipulated in the certificate obtained, as applicable, of the gross Merger Consideration received by such shareholder.
Regardless of whether Gilat obtains the requested tax rulings from the Israel Tax Authority, any holder of Gilat Shares who believes that it is entitled to such an exemption (or reduced tax rate) may separately apply
 
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to the Israel Tax Authority to obtain a certificate of exemption from withholding or an individual tax ruling providing for no withholding or withholding at a reduced rate, and submit such certificate of exemption or ruling to the exchange agent at least five business days prior to the date that is 180 days following the Closing Date. If Comtech or the exchange agent receive a valid exemption certificate or tax ruling (as determined in Comtech’s or the exchange agent’s discretion) at least five business days prior to the date that is 180 days following the Closing Date, then the withholding (if any) of any amounts under the ITO, from the Merger Consideration payable shall be made only in accordance with the provisions of such Israeli tax certificate or tax ruling.
You are urged to consult with your own tax advisor for a full understanding of the tax consequences of the Merger to you, including the consequences under any applicable, state, local, foreign or other tax laws.
For a more detailed description of the material Israeli tax consequences of the Merger, see the section entitled “Material Israeli Tax Consequences.”
Recommendation of the Gilat Board
The Gilat Board unanimously recommends a vote “FOR” the Merger Proposal and the other proposals on the agenda. For a discussion of the factors that the Gilat Board considered in determining to recommend the approval and adoption of the Merger Agreement, the Merger and all other transactions contemplated by the Merger Agreement, see “The Merger — Gilat’s Reasons for the Merger; Recommendation of the Gilat Board.” In addition, in considering the recommendation of the Gilat Board with respect to the Merger Agreement, the Merger, and the other transactions contemplated by the Merger Agreement, you should be aware that Gilat’s directors and executive officers have interests that may be different from, or in addition to, the interests of the Gilat shareholders generally. For more information, see “The Merger — Interests of Gilat Directors and Executive Officers in the Merger.”
Opinion of Jefferies LLC
Gilat engaged Jefferies LLC (“Jefferies”) to provide certain financial advisory services to the Gilat Board in connection with the Merger. As part of this engagement, Jefferies delivered a written opinion, dated January 29, 2020, to the Gilat Board as to the fairness, from a financial point of view and as of such date, of the Merger Consideration to be received by holders of Gilat Shares (other than, as applicable, Comtech, Merger Sub and their respective affiliates) pursuant to the Merger Agreement. The full text of Jefferies’ opinion, which describes various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Jefferies, is attached as Annex B to this proxy statement/prospectus and is incorporated herein by reference. Jefferies’ opinion was provided for the use and benefit of the Gilat Board (in its capacity as such) in its evaluation of the Merger Consideration from a financial point of view and did not address any other aspect of the Merger or any other matter. Jefferies’ opinion did not address the relative merits of the Merger or other transactions contemplated by the Merger Agreement as compared to any alternative transaction or opportunity that might be available to Gilat, nor did it address the underlying business decision by Gilat to engage in the Merger. Jefferies’ opinion did not constitute a recommendation as to how the Gilat Board, and does not constitute a recommendation as to how any securityholder, should vote or act with respect to the Merger or any other matter. The summary of Jefferies’ opinion set forth herein is qualified in its entirety by reference to the full text of Jefferies’ opinion.
Interests of Gilat Directors and Executive Officers in the Merger
In considering the recommendation of the Gilat Board with respect to the Merger Proposal, you should be aware that Gilat’s directors and executive officers have interests in the Merger Proposal that may be different from, or in addition to, the interests of the Gilat shareholders in general. The Gilat Board was aware of these different or additional interests in determining to approve and adopt the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, and to recommend to the Gilat shareholders that they vote in favor of the Merger Proposal.
Gilat Share Options
As of the Effective Time, each option to acquire Gilat Shares that is outstanding as of immediately prior to the Effective Time, that is vested or that will become vested by virtue of the Merger, will be cancelled
 
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and converted into the right to receive the Merger Consideration with respect to the number of net shares subject to such option, less applicable tax withholding. For this purpose, “net share” means, with respect to an option, the quotient of  (i) the product of  (A) the excess, if any, of the value of the Merger Consideration (calculated as specified in the Merger Agreement) over the exercise price or purchase price per Gilat Share (as applicable) subject to such option, multiplied by (B) the number of Gilat Shares subject to such option, divided by (ii) the value of the Merger Consideration.
As of the Effective Time, each option to acquire Gilat Shares that is outstanding immediately prior to the Effective Time, that is unvested and will remain unvested upon consummation of the Merger (the “Converted Option”), will be assumed by Comtech and converted into a number of Comtech restricted stock units (“Substituted RSUs”) equal in value on the date of grant (based on the volume-weighted average of the trading prices of Comtech Common Stock for the ten (10) most recent trading days ending on (and including) the second-to-last trading day immediately prior to the Effective Time (the “Parent Average Trading Price”)) to the product of  (A) the number of Gilat Shares underlying such option and (B) an amount equal to (x) the cash value of the Merger Consideration (with the cash value of the Comtech Common Stock portion of the Merger Consideration calculated based on the Parent Average Trading Price), less (y) the per share exercise price of such option. The Substituted RSUs shall be subject to vesting in accordance with the same vesting schedule as was applicable to the Converted Options prior to the Effective Time.
As of March 30, 2020, the directors and executive officers of Gilat (16 individuals) hold an aggregate of options to purchase 2,093,897 Gilat Shares (the “Gilat Options”), with a weighted average exercise price of  $6.69, of which (i) options to purchase 1,081,398 Gilat Shares are currently vested or scheduled to vest by June 30, 2020, (ii) options to purchase 617,499 Gilat Shares held by 6 executive officers of Gilat (including options to purchase 550,000 Gilat Shares held by Yona Ovadia, Gilat’s Chief Executive Officer, and options to purchase 52,500 Gilat Shares held by Adi Sfadia, Gilat’s Chief Financial Officer) will become vested at the Effective Time by virtue of the Merger in accordance with the original terms of such option award agreements and Gilat’s 2008 Share Incentive Plan, and (iii) options to purchase 395,000 Gilat Shares will remain unvested at the Effective Time.
Transaction Bonuses — Executive Officers
In connection with the Merger, the Gilat Board, following the approval and recommendation of the Compensation Committee, has elected to pay (i) a transaction bonus of  $1,000,000 to Yona Ovadia, Gilat’s Chief Executive Officer, payable over a 12 month period following the Effective Time, subject to compliance with certain terms and conditions, and (ii) a transaction bonus of  $500,000 to Adi Sfadia, Gilat’s Chief Financial Officer, payable immediately prior to the Effective Time. In accordance with Israeli law, the transaction bonuses payable to Messrs. Ovadia and Sfadia, are also being submitted to the approval of the Gilat shareholders, as set forth in Proposals 3 and 4 of the proxy statement/prospectus.
Amendment to 2019 Annual Bonus Payment Schedule — Executive Officers
In connection with the Merger, the Gilat Board, following the approval and recommendation of the Compensation Committee, has elected to amend the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors. Pursuant to the existing policy, the payment of between 20% and 30% of the annual bonus payable to each executive officer is deferred to the following year and is payable subject to the executive remaining employed by Gilat or its subsidiary during the deferral year and Gilat complying with certain financial metrics. Pursuant to the proposed amendment, in the event Gilat is acquired during a bonus year or during a bonus deferral period, the deferred bonus amount shall become payable at the time of payment of the annual bonus or the time the acquisition is consummated, as applicable. In accordance with Israeli law, such amendment is also being submitted to the approval of the Gilat shareholders, as set forth in Proposal 5 of the proxy statement/prospectus.
Indemnification and D&O Insurance Arrangements
Pursuant to the Merger Agreement, Comtech has agreed, for a period of seven years after the Effective Time, to cause the surviving company in the Merger to honor all existing indemnification agreements with Gilat’s directors and officers, and to maintain provisions in its organizational documents with respect to
 
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director and officer indemnification, exculpation and expense advancement provisions that are at least as favorable as those existing immediately prior to the Effective Time with respect to acts or omissions occurring prior to the Effective Time.
Finally, at any time prior to the Effective Time, Gilat has the right to purchase a seven-year “tail” endorsement to the current directors’ and officers’ liability insurance policies with terms, conditions, retentions and limits of liability that are no less favorable in the aggregate than the coverage provided under Gilat’s existing policies of directors’ and officers’ liability insurance and fiduciary liability insurance. This D&O insurance arrangement shall not detract from any existing (or prior) insurance policy of Gilat, including, without limitation, Gilat’s existing (or prior) directors’ and officers’ liability insurance policies. In accordance with Israeli law, the purchase of the “tail” endorsement is being submitted to the approval of the Gilat shareholders, as set forth in Proposal 2 of the proxy statement/prospectus.
For more details on the indemnification and insurance arrangements for Gilat’s directors and officers, see “The Merger Agreement — Directors’ and Officers’ Indemnification and Insurance.
Employee Compensation and Benefits
Under the Merger Agreement, Comtech has undertaken that for one year following the Effective Time, it will cause the surviving company (i) to provide each continuing employee of Gilat in the U.S. (A) an annual salary, (B) cash incentive compensation opportunities and (C) employee benefits (excluding equity or equity-based compensation or incentive opportunities), in each case, that are substantially comparable in the aggregate to those provided by Comtech or its affiliates to its similarly situated employees in the same or comparable geographical locations, and (ii) to provide each continuing employee of Gilat in other jurisdictions, including Israel, (A) an annual salary, and (B) cash incentive compensation, in each case, at least equal to those provided by Gilat to such employee before the Effective Time, and (C) employee benefits (excluding equity or equity-based compensation or incentive opportunities) that are substantially comparable in the aggregate to those provided by Gilat to such employee before the Effective Time.
Treatment of Gilat Options
On the terms and subject to the conditions of the Merger Agreement, at the Effective Time, all options to purchase Gilat Shares outstanding immediately prior to the Effective Time that are vested or that will become vested by virtue of the Merger (each, a “Cancelled Option”), will be cancelled and converted into the right to receive the Merger Consideration with respect to the number of net shares subject to such option, less applicable tax withholding (the “Option Consideration”). For this purpose, “net share” means, with respect to an option, the quotient of  (i) the product of  (A) the excess, if any, of the value of the Merger Consideration (calculated as specified in the Merger Agreement) over the exercise price or purchase price per Gilat Share (as applicable) subject to such option, multiplied by (B) the number of Gilat Shares subject to such option, divided by (ii) the value of the Merger Consideration. The holder of each Cancelled Option that is not a Gilat 102 Option will receive at the Effective Time from Gilat, or as soon as practicable thereafter (but in no event later than Gilat’s first full payroll after the Effective Time) from the Surviving Company, the Option Consideration. If the exercise price per share of any such Cancelled Option is equal to or greater than the Merger Consideration, such option will, by direction of Comtech, be cancelled without any payment being made in respect thereof. The holder of each Cancelled Option that is a Gilat 102 Option or that is otherwise held by the 102 Trustee will receive the Option Consideration through the 102 Trustee.
All Converted Options will be assumed by Comtech and converted into a number of Substituted RSUs equal in value on the date of grant (based on the Parent Average Trading Price, as defined in the Merger Agreement) to the product of  (A) the number of Gilat Shares underlying such option and (B) an amount equal to (x) the cash value of the Merger Consideration (with the cash value of the Comtech Common Stock portion of the Merger Consideration calculated based on the Parent Average Trading Price), less (y) the per share exercise price of such option. The Substituted RSUs will be subject to vesting in accordance with the same vesting schedule as was applicable to the Converted Options prior to the Effective Time.
Notwithstanding the two paragraphs above, Comtech may, prior to the Effective Time, determine reasonably and in good faith, subject to the consent of Gilat, which will not be unreasonably withheld,
 
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conditioned or delayed, that any Gilat Options that is subject to the applicable laws of a non-U.S. or non-Israeli jurisdiction may be treated in a different manner, to the extent that (i) Comtech and Gilat reasonably and in good faith determine that (A) the manner in which such Gilat Options would otherwise be treated pursuant to the above paragraphs would result in a violation of applicable laws or a materially adverse tax consequence to the individual holding such Gilat Options in the applicable non-U.S. or non-Israeli jurisdiction and (B) such different treatment is necessary to comply with such applicable laws; and (ii) such different treatment is, to the maximum extent practicable, consistent with the paragraphs above regarding the treatment of Gilat Options, Comtech and Gilat will agree at least ten days prior to the Effective Time to the treatment of any Gilat Options that will be treated in a manner other than as described in the paragraphs above.
Promptly after the Effective Time (but in no event later than ten business days following the Effective Time), Comtech will prepare and file with the SEC a registration statement on Form S-8 (or other appropriate form) relating to the shares of Comtech Common Stock issuable with respect to, or underlying, the Converted Options that are not already subject to a registration statement on Form S-8 (or other appropriate form).
Competition Clearances Required for the Merger
Comtech and Gilat are required to submit notifications to various competition authorities prior to completing the Merger. The following conditions are required to effect the Merger: (i) all applicable waiting periods (and extensions thereof) applicable to the transactions contemplated by the Merger Agreement (including the Merger) under the HSR Act must have expired or been terminated; (ii) solely to the extent required by applicable law, all governmental entities that administer export, import and sanctions laws or DCSA Requirements (as such term is defined in the Merger Agreement) must have provided their assent or indicated their non-objection to the Merger; (iii) any affirmative exemption or approval of a governmental entity required under any antitrust law set forth on the Gilat Disclosure Letter as of the date of the Merger Agreement must have been obtained and any mandatory waiting periods related thereto (including any extension thereof) must have expired; and (iv) Comtech must have obtained the ISA Exemptions (as defined in the Merger Agreement).
With respect to the United States, the waiting period under the HSR Act related to the Merger has expired. While Comtech and Gilat expect to obtain all other required regulatory clearances, Comtech and Gilat cannot assure you that the antitrust regulators or other government agencies, including state attorneys general or private parties, will not initiate actions to challenge the Merger before or after it is completed. Any such challenge to the Merger could result in an administrative or court order enjoining the Merger or in restrictions or conditions that would have a material adverse effect on the combined company if the Merger is completed. Such restrictions and conditions could include requiring the divestiture or spin-off of assets or businesses, the required licensing of intellectual property rights, or limitations on the ability of the combined company to operate its business as it sees fit. Neither Comtech nor Gilat can provide assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the Merger.
Expected Timing of the Merger
Comtech and Gilat expect the Closing to occur in the second or third quarter of the calendar year 2020 (such date that the Closing occurs, the “Closing Date”). However, the Merger is subject to various regulatory approvals and the satisfaction or waiver of other conditions, and it is possible that factors outside the control of Comtech and Gilat could result in the Merger being completed at an earlier time, a later time or not at all. There may be a substantial amount of time between the date on which the General Meeting is held and the date of the completion of the Merger. The Merger will become effective following the satisfaction or waiver of the conditions to Closing upon the issuance by the Israeli Companies Registrar of a certificate of merger.
Conditions to Completion of the Merger
Under the Merger Agreement, each party’s obligation to effect the Merger is subject to satisfaction or, to the extent permitted where permissible under applicable law, mutual waiver at the Effective Time of each of the following conditions:
 
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The Gilat Shareholder approval must have been obtained.

All (i) applicable waiting periods (and extensions thereof) applicable to the transactions contemplated by the Merger Agreement (including the Merger) under the HSR Act must have expired or been terminated, (ii) solely to the extent required by applicable law, all governmental entities that administer export, import and sanctions laws or DCSA Requirements (as such term is defined in the Merger Agreement) must have provided their assent or indicated their non-objection to the Merger, and (iii) any affirmative exemption or approval of a governmental entity required under any antitrust law set forth on the Gilat Disclosure Letter as of the date of the Merger Agreement must have been obtained and any mandatory waiting periods related thereto (including any extension thereof) must have expired (collectively, the “Regulatory Approvals”).

No governmental entity of competent jurisdiction shall have (i) enacted, promulgated or issued after the date of the Merger Agreement any applicable law that is then in effect and has the effect of enjoining, making unlawful or otherwise prohibiting the consummation of the Merger; or (ii) issued or granted after the date of the Merger Agreement any order (whether temporary, preliminary or permanent) that is then in effect which has the effect of enjoining, making unlawful or otherwise prohibiting the consummation of the Merger.

The shares of Comtech Common Stock issuable as Stock Merger Consideration (as defined in “The Merger Agreement — The Merger”) pursuant to the Merger Agreement must have been approved for listing on Nasdaq, subject to official notice of issuance.

50 days must have elapsed after the filing of the Merger Proposal with the Israeli Companies Registrar and 30 days must have elapsed after the approval of the Merger by the Gilat shareholders at the General Meeting.

This Form S-4 must have been declared effective by the SEC under the Securities Act and no stop order suspending the effectiveness of this Form S-4 shall have been issued by the SEC and no proceedings for that purpose shall have been initiated or threatened by the SEC that have not been withdrawn.

Comtech must have obtained the ISA Exemptions (as defined in the Merger Agreement).
Comtech’s and Merger Sub’s obligation to effect the Merger is further subject to the satisfaction by Gilat or waiver by Comtech and Merger Sub of the following conditions:

Accuracy of representations and warranties of Gilat:

Each of the representations and warranties of Gilat set forth in the Merger Agreement (other than certain representations and warranties of Gilat described in the immediately following bullet points) shall have been true and correct (without giving effect to any qualifications as to materiality or Material Adverse Effect set forth therein) as of the date of the Merger Agreement and as of the Effective Time as though made as of the Effective Time (except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date), except where any failure to be so true and correct would not, individually or in the aggregate, have a Material Adverse Effect on Gilat.

Each of the representations and warranties of Gilat set forth in the Merger Agreement relating to Organization and Standing (solely to the extent relating to Gilat), Capitalization (solely with respect to subsection (c) thereof), Brokers; Fees and Expenses, Opinion of Financial Advisor and Takeover Statutes; No Rights Plan shall have been true and correct in all material respects as of the date of the Merger Agreement and as of the Effective Time as though made as of the Effective Time (except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date).

Each of the representations and warranties of Gilat set forth in the Merger Agreement relating to Capitalization (solely with respect to subsections (a) and (d) thereof) shall have been true and correct in all but de minimis respects as of the date of the Merger Agreement and as of the Effective Time as though made as of the Effective Time (except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date).
 
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Each of the representations and warranties of Gilat set forth in the Merger Agreement relating to Authorization and No Material Adverse Effect (solely with respect to subsection (b) thereof) shall have been true and correct in all respects as of the date of the Merger Agreement and as of the Effective Time as though made as of the Effective Time.

Gilat must have complied with and performed in all material respects all obligations under the Merger Agreement required to be complied with and performed by it at or prior to the Closing.

Since the date of the Merger Agreement, a Material Adverse Effect on Gilat must not have occurred.

Comtech must have received a certificate signed on behalf of Gilat by a duly authorized officer of Gilat certifying to the effect that the preceding three conditions have been satisfied.
Gilat’s obligation to effect the Merger is further subject to the satisfaction by Comtech or waiver by Gilat of the following conditions:

Accuracy of representations and warranties of Comtech and Merger Sub:

Each of the representations and warranties of Comtech and Merger Sub set forth in the Merger Agreement (other than the representations in the immediately following bullet point) shall have been true and correct (without giving effect to any qualifications as to materiality or Material Adverse Effect set forth therein) in all respects as of the date of the Merger Agreement and as of the Effective Time as though made as of the Effective Time (except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date), except where any failure to be so true and correct would not, individually or in the aggregate, have a Material Adverse Effect on Comtech.

Each of the representations and warranties of Comtech set forth in the Merger Agreement relating to Organization, Authorization, and Brokers; Fees and Expenses shall have been true and correct in all material respects as of the date of the Merger Agreement and as of the Effective Time as though made as of the Effective Time (except to the extent such representations and warranties expressly relate to a specified date, in which case as of such specified date).

Each of Comtech and Merger Sub must have complied with and performed in all material respects all obligations under the Merger Agreement required to be complied with and performed by each of them at or prior to the Closing.

Since the date of the Merger Agreement, a Material Adverse Effect on Comtech must not have occurred.

Gilat must have received a certificate signed on behalf of Comtech and Merger Sub by a duly authorized officer of each Comtech and Merger Sub certifying to the effect that the preceding three conditions have been satisfied.
No Solicitation of Alternative Proposals
Gilat has agreed that it will not, directly or indirectly:

whether publicly or otherwise, solicit, initiate, knowingly encourage, or knowingly facilitate or induce the making, submission or announcement of an Acquisition Proposal or any inquiry, offer, proposal or indication of interest that constitutes or could reasonably be expected to lead to any Acquisition Proposal (as defined below);

in connection with or in response to any Acquisition Proposal or any inquiry, offer, proposal or indication of interest that could reasonably be expected to lead to an Acquisition Proposal, furnish to any third party any non-public information relating to Gilat or any of its subsidiaries, or afford access to the business, properties, assets, books or records or other information of Gilat or any of its subsidiaries to any third party;

enter into, conduct, participate or engage in negotiations or discussions with any third party (other than solely to inform such third party that the terms of the Merger Agreement prohibit such discussions) relating to or for the purpose of encouraging or facilitating an Acquisition Proposal;
 
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approve, adopt, declare advisable, endorse or recommend an Acquisition Proposal;

execute or enter into any letter of intent, memorandum of understanding, agreement in principle, term sheet, merger agreement or contract contemplating or otherwise relating to an Acquisition Transaction (as defined below) or requiring Gilat to abandon, terminate or fail to consummate the transactions contemplated by the Merger Agreement;

fail to enforce, terminate, amend, modify, waive or release any rights under any “standstill” or other similar agreement (unless the Gilat Board determines in good faith (after consultation with its outside legal counsel) that the failure to grant any waiver or release under any standstill or similar agreement would be inconsistent with its fiduciary duties under Israeli law); or

resolve, propose or agree to do any of the foregoing.
Gilat also agreed to immediately cease and cause to be terminated any and all activities, discussions or negotiations with any third party concerning any Acquisition Proposal existing as of the date of the Merger Agreement. Gilat also agreed to request that each person who had executed a confidentiality agreement in connection with its consideration of an Acquisition Proposal, promptly return or destroy all confidential information furnished prior to the execution of the Merger Agreement to or for the benefit of such person by or on behalf of Gilat or any of its subsidiaries or their respective representatives.
However, until Gilat shareholders approve the Merger, if Gilat receives a bona fide written Acquisition Proposal from any person that did not result from a breach (other than immaterial and unintentional breaches) of its non-solicitation obligations that the Gilat Board determines in good faith (after consultation with Gilat’s financial advisors and outside legal counsel) is or is reasonably likely to lead to a Superior Proposal (as defined below) and that (after consultation with outside legal counsel) the failure to take such actions would be inconsistent with the fiduciary duties of the Gilat Board under applicable law, Gilat may:

contact the third party who has made such Acquisition Proposal solely for the purpose of seeking clarification of the terms or conditions of such Acquisition Proposal necessary to make a determination that such Acquisition Proposal constitutes or is reasonably likely to lead to a Superior Proposal;

engage or participate in discussions or negotiations with such third party or any of its representatives regarding such Acquisition Proposal; or

afford access and furnish to such third party or any of its representatives any information relating to Gilat or any of its subsidiaries pursuant to a confidentiality agreement, the terms of which, taken as a whole, are no less favorable to Gilat than that between Gilat and Comtech and do not include any provision calling for the exclusive right to negotiate with such party or having the effect of prohibiting Gilat from satisfying its obligations under the Merger Agreement; provided that any such information (to the extent such information has not been previously provided or made available to Comtech) is furnished to Comtech prior to or concurrently (and in any event within 24 hours) with the provision of information by Gilat to such third party.
Gilat must promptly, and in all cases within 24 hours of its receipt, advise Comtech orally and in writing of any (i) Acquisition Proposal; (ii) request for information or request to engage in negotiations or discussions or any other inquiry with respect to, or that could reasonably be expected to lead to, an Acquisition Proposal; or (iii) request for a waiver or release under any standstill or similar contract. Gilat must provide Comtech with (A) the material terms and conditions of such Acquisition Proposal, request or inquiry, including any financing arrangements to the extent provided to Gilat, any of its subsidiaries or any representative of Gilat (other than the identity of the third party who has made the Acquisition Proposal, request or inquiry), (B) whether such Person or group making any such Acquisition Proposal, request or inquiry, is a financial or strategic buyer, and (C) copies of all written materials provided by such person in connection with such Acquisition Proposal, request or inquiry (redacted so as not to identify the person who has made such Acquisition Proposal, request or inquiry).
Gilat must keep Comtech reasonably informed of the status of discussions relating to, and the material terms and conditions (including all amendments or proposed amendments to such material terms and conditions) of any such Acquisition Proposal, request or inquiry, and promptly (and in no event later than 24 hours thereafter), provide Comtech with copies of any revised written proposals or draft agreements relating to any Acquisition Proposal, request or inquiry.
 
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The Gilat Board may, subject to complying with certain specified procedures, including providing Comtech with a good faith opportunity to negotiate and, in certain circumstances, paying a termination fee as described below, (1) change its recommendation in favor of the Merger and the transactions contemplated by the Merger Agreement or terminate the Merger Agreement in order to enter into a definitive agreement regarding an unsolicited Acquisition Proposal that is determined to be a Superior Proposal, or (2) change its recommendation in favor of the Merger and the transactions contemplated by the Merger Agreement in response to a Company Intervening Event (as defined in the Merger Agreement) that becomes known to the Gilat Board after the date of the Merger Agreement but prior to the Gilat shareholder approval, in each case, to the extent failure to do so would be inconsistent with its fiduciary duties under applicable law.
The Merger Agreement provides that the term “Acquisition Proposal” means any offer, proposal or indication of interest from any third party relating to any Acquisition Transaction.
The Merger Agreement provides that the term “Acquisition Transaction” means any transaction or series of related transactions (other than the transactions contemplated by the Merger Agreement) involving: (i) any acquisition by any third party, directly or indirectly, of 20% or more of the outstanding Gilat Shares, or any tender offer (including a self-tender) or exchange offer that, if consummated, would result in any third party beneficially owning (as defined under Section 13(d) of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”)) 20% or more of the Gilat Shares; or (ii) any acquisition by any third party, directly or indirectly, of 20% or more of the assets, net revenues or net income (including equity securities of Gilat’s subsidiaries) of Gilat (on a consolidated basis with its subsidiaries), measured on a book value basis, in the case of each of clause (i) and (ii), whether pursuant to a merger, consolidation, reorganization, recapitalization, liquidation, dissolution, share exchange or other business combination, sale of shares of capital stock, sale of assets, tender offer, exchange offer or similar transaction involving Gilat.
The Merger Agreement provides that the term “Superior Proposal” means any bona fide, written Acquisition Proposal made after the date of the Merger Agreement that did not result from a breach (other than immaterial and unintentional breaches) of the Merger Agreement (with references to 20% in the definition thereof being deemed to be replaced with references to 50%) made by a third party, with respect to which the Gilat Board shall have determined in good faith (after consultation with Gilat’s financial advisors and outside legal counsel, and after taking into account the financial, legal, regulatory and other aspects of such Acquisition Proposal, the identity and financial capability of the third party making such Acquisition Proposal and all of the terms and conditions of such Acquisition Proposal (including any termination or break-up fees, expense reimbursement provisions, the financing thereof and any conditions or other risks to consummation, as well as any changes to the Merger Agreement offered by Comtech in writing in response to such Acquisition Proposal) that the proposed Acquisition Transaction is (a) more favorable to the Gilat shareholders, from a financial point of view, than the Merger, and (b) reasonably capable of being completed on the terms proposed.
 
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Termination of the Merger Agreement
The Merger Agreement may be terminated at any time prior to the Effective Time by mutual written agreement of Comtech and Gilat, and either party may terminate the Merger Agreement in the following circumstances:

If the Gilat Shareholder meeting shall have been held and the Gilat Shareholder approval has not been obtained.

If any governmental entity of competent jurisdiction has after the date of the Merger Agreement (i) enacted, promulgated or issued any law which has the effect of permanently prohibiting, making illegal or otherwise permanently preventing the consummation of the Merger; or (ii) issued or granted any final and nonappealable order that has the effect of permanently prohibiting, making illegal or otherwise permanently preventing the consummation of the Merger; provided, however, that this right to terminate will not be available to any party whose action or failure to fulfill any obligation under the Merger Agreement has been the principal cause of the enactment, promulgation or issuance of such law or issuance or entry of such final and nonappealable order.

If the Effective Time has not occurred on or prior to July 29, 2020 (as it may be extended pursuant to the Merger Agreement, the “Termination Date”), provided, however, that if, as of July 29, 2020, any of the Regulatory Approvals shall not have been obtained but all other conditions to Closing set forth in the Merger Agreement has been satisfied or waived or by their terms cannot be satisfied until immediately prior to the Closing (but which conditions would be satisfied if the Closing Date were July 29, 2020), the Termination Date shall be extended to October 29, 2020; provided, further, that this right to terminate the Merger Agreement will not be available to any party whose action or failure to fulfill any obligation under the Merger Agreement has been the principal cause of the failure of the Effective Time to have occurred on or prior to the Termination Date.
Gilat may also terminate the Merger Agreement at any time prior to the Effective Time as follows:

In the event of a breach of any representation, warranty, covenant or agreement on the part of Comtech or Merger Sub set forth in the Merger Agreement such that the conditions to Gilat’s obligation to close the Merger based on the accuracy of the representations and warranties of Comtech and Merger Sub or their material performance of covenants would not be satisfied as of the Closing Date as a result of such breach, subject to customary cure periods (if curable); provided that this right to terminate will not be available to Gilat if Gilat is then in breach of any of its obligations under the Merger Agreement so as to result in the failure of certain conditions to Comtech’s obligations to close.

Prior to the receipt of the approval of the Merger by Gilat’s shareholders in order to accept a Superior Proposal in accordance with the Merger Agreement; provided that Gilat pays Comtech, or causes Comtech to be paid, $21,675,000, substantially concurrently with such termination.
Comtech may also terminate the Merger Agreement at any time prior to the Effective Time as follows:

In the event of a breach of any representation, warranty, covenant or agreement on the part of Gilat set forth in the Merger Agreement such that the conditions to Comtech’s obligation to close the Merger based on the accuracy of Gilat’s representations and warranties or its material performance of covenants would not be satisfied as of the Closing Date as a result of such breach, subject to customary cure periods (if curable); provided, that this right to terminate will not be available to Comtech if Comtech is then in breach of any of its obligations under the Merger Agreement so as to result in the failure of certain conditions to Gilat’s obligations to close.

Prior to the receipt of the approval of the Merger by Gilat’s shareholders in the event that a Triggering Event (as defined in “The Merger Agreement — Termination of the Merger Agreement”) shall have occurred.
 
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Termination Fees
Gilat will be required to pay to Comtech a termination fee of  $21,675,000 by wire transfer of immediately available funds to an account or accounts designated in writing by Comtech if the Merger Agreement is terminated as follows:

prior to the Gilat shareholder approval, by Gilat in order to enter into a definitive agreement with respect to a Superior Proposal pursuant to the Merger Agreement;

by Comtech as a result of a Triggering Event; or

by (1) either party if the Gilat shareholders meeting is held and the approval of the Merger by the Gilat shareholders is not obtained, or (2) Comtech for Gilat’s breach of its covenants giving rise to the failure of certain conditions to Closing to be satisfied, but only if:

following the execution and delivery of the Merger Agreement and prior to the date of the Gilat Shareholder meeting, an Acquisition Proposal has been publicly announced, has been publicly disclosed or has been otherwise publicly known to the Gilat Shareholders; and

within 12 months following the termination of the Merger Agreement, Gilat enters into a contract with respect to any Acquisition Proposal and such Acquisition Proposal is thereafter consummated (which need not be the same Acquisition Proposal that was publicly made, disclosed or communicated before the Gilat Shareholder meeting) (however, for purposes of this provision, all references to “20%” in the definition of  “Acquisition Transaction” will be deemed to be references to “50%”); or

by Gilat if the Effective Time has not occurred by the Termination Date (provided that prior to such termination all Regulatory Approvals have been obtained and there are no laws or orders that are in effect prohibiting the consummation of the Merger), but only if:

following the execution and delivery of the Merger Agreement and prior to the date of the Gilat Shareholder meeting, an Acquisition Proposal has been publicly announced, has been publicly disclosed or has been otherwise publicly known to the Gilat shareholders, and in each case, has not been withdrawn; and

within 12 months following the termination of the Merger Agreement, Gilat enters into a contract with respect to any Acquisition Proposal and such Acquisition Proposal is thereafter consummated (which need not be the same Acquisition Proposal that was publicly made, disclosed or communicated before the Gilat Shareholder meeting) (however, for purposes of this provision, all references to “20%” in the definition of  “Acquisition Transaction” will be deemed to be references to “50%”).
Accounting Treatment
Comtech prepares its financial statements under existing U.S. generally accepted accounting principles, which are referred to as “GAAP standards,” which are subject to change and interpretation. The Merger will be accounted for using the acquisition method of accounting with Comtech being considered the acquiror of Gilat for accounting purposes.
Appraisal Rights
Under Israeli law, holders of Gilat Shares are not entitled to statutory appraisal rights in connection with the Merger. See “Appraisal Rights.”
Comparison of Rights of Gilat Shareholders and Comtech Stockholders
Gilat shareholders receiving Comtech Common Stock as part of their Merger Consideration will have different rights once they become stockholders of Comtech due to differences between the governing laws and corporate documents of Gilat and the governing laws and corporate documents of Comtech. Certain principal differences are described in “Comparison of Rights of Gilat Shareholders and Comtech Stockholders.”
 
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Listing of Additional Shares of Comtech Common Stock
Comtech agreed in the Merger Agreement that it will cause the shares of Comtech Common Stock to be issued in the Merger to be approved for listing on Nasdaq, subject to official notice of issuance, prior to the Effective Time.
Prior to the Closing Date, Gilat will cooperate with Comtech and use reasonable best efforts to facilitate, in accordance with applicable laws and rules and policies of Nasdaq and the TASE, the delisting by the Surviving Company of the Gilat Shares from Nasdaq and the TASE, and the deregistration of the Gilat Shares under the Exchange Act and the Israel Securities Law, 5728-1968 (the “Securities Law”), in each case, as of the Effective Time or as promptly as practicable thereafter.
Comtech will use reasonable best efforts to (i) cause the Comtech Common Stock to be listed on the TASE immediately prior to, on or promptly following the Closing Date pursuant to Section E’3 of the Securities Law and consistent with customary practices (the “Dual Listing”), and (ii) in connection therewith, obtain the approval of the TASE to list the shares of Comtech Common Stock to be issued in the Merger on the TASE.
For a more detailed description of the listing of additional shares of Comtech Common Stock, see “The Merger Agreement — Stock Exchange Listing.”
De-Listing and Deregistration of Gilat Shares
If the Merger is completed, the registration of the Gilat Shares and Gilat’s reporting obligations under the Exchange Act will be terminated upon notification to the SEC. In addition, upon completion of the proposed Merger, the Gilat Shares will no longer be listed on any stock exchange, including Nasdaq and the TASE.
The Gilat Extraordinary General Meeting
The General Meeting will be held on Friday, May 8, 2020 at 12:00 p.m. (Israel time), at Gilat’s principal executive offices at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel. In light of the recent outbreak of the coronavirus (COVID-19) pandemic, Gilat reserves the option to convert the General Meeting from a physical meeting to a virtual meeting at a later date. In such event, Gilat will issue a press release and furnish a Form 6-K or other document with the SEC prior to the date of the General Meeting outlining the manner in which shareholders may attend the virtual meeting.
At the General Meeting, you will be asked to consider and vote on the following:

approval of  (i) the Merger Agreement; (ii) the Merger; (iii) the Merger Consideration; and (iv) all other transactions contemplated by the Merger Agreement and related to the Merger, as detailed in Gilat’s proxy statement/prospectus for the General Meeting (collectively, the “Merger Proposal”);

the approval to purchase a seven-year “tail” endorsement to Gilat’s current directors’ and officers’ liability insurance policy;

the approval of the payment of a transaction bonus to the Chief Executive Officer of Gilat;

the approval of the payment of a transaction bonus to the Chief Financial Officer of Gilat;

the approval of an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors; and

the reelection of Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board for an additional three-year term or until his prior termination or resignation.
Required Vote
The approval of the Merger Proposal will require the affirmative vote of holders of a majority of the Gilat Shares present, in person or by proxy, and voting on the Merger Proposal (not taking into consideration abstentions), excluding any Gilat Shares that are held by Merger Sub, Comtech or by any person or entity holding at least 25% of the “means of control” (within the meaning of the ICL) of either Merger Sub or
 
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Comtech, or any person or entity acting on behalf of either Merger Sub or Comtech or any person or entity described in the previous clause, including any of their affiliates. Under the Merger Agreement, Comtech has represented that it does not own directly or indirectly any Gilat Shares and based on the public filings of Comtech and its stockholders, as of the Record Date, no stockholder of Comtech holds 25% or more of the common stock of Comtech or any other kind of means of control of Comtech.
The approval of each of the other proposals requires the affirmative vote of a majority of the Gilat Shares present, in person or by proxy, and voting on such proposal (not taking into consideration abstentions). In addition, in order to approve each of  (A) Proposal 2 (the purchase of the “tail” endorsement to the D&O liability insurance policy), (B) Proposal 3 (the payment of a transaction bonus to the Chief Executive Officer of Gilat), (C) Proposal 4 the payment of a transaction bonus to the Chief Financial Officer of Gilat), (D) Proposal 5 (the amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors) and (E) Proposal 6, (the reelection of Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board), the shareholders’ approval must either (i) include at least a majority of the Gilat Shares voted by shareholders who are not controlling shareholders (within the meaning of the ICL) and who are not shareholders who have a personal interest (within the meaning of the ICL) in the approval of such proposal (excluding, in the case of Proposal 6, a personal interest that is not related to a relationship with the controlling shareholders), not taking into consideration abstentions, or (ii) be obtained such that the total Gilat Shares of non-controlling shareholders and non-interested shareholders voted against such proposal do not represent more than two percent of the outstanding Gilat Shares.
Voting Agreement
Concurrently with the execution of the Merger Agreement, Comtech entered into Voting Agreements (collectively, the “Voting Agreements”), with certain shareholders of Gilat, including, among others, directors and executive officers of Gilat who beneficially own Gilat Shares (each, a “Locked-Up Shareholder” and, collectively, the “Locked-Up Shareholders”) representing approximately 45% of the issued and outstanding Gilat Shares in the aggregate, pursuant to which each Locked-Up Shareholder has agreed, among other things, to: (i) vote its beneficially owned Gilat Shares (a) in favor of the Merger and the other transactions contemplated by the Merger Agreement, including any matter necessary for the consummation of the Merger, (b) in favor of any proposal to adjourn or postpone any meeting of Gilat shareholders at which any of the foregoing matters are submitted for consideration and vote of the Gilat shareholders if there are not sufficient votes for approval of any such matters on the date on which the meeting is held, (c) against any third party acquisition transactions and (d) against any other proposal made in opposition to the adoption of the Merger Agreement or that would reasonably be expected to prevent the consummation of the Merger; and (ii) comply with certain restrictions on the disposition of such shares, in each case subject to the terms and conditions contained therein.
The Voting Agreement will terminate upon the earliest to occur of  (i) the Effective Time, (ii) the date the Merger Agreement is terminated in accordance with its terms, (iii) a change of the recommendation of the Gilat Board that the Gilat shareholders approve the Merger that is unanimously approved by the Gilat Board, and (iv) with respect to any Locked-Up Shareholder, the mutual written agreement of Comtech and such Locked-Up Shareholder to terminate the Voting Agreement, or at the option of such Locked-Up Shareholder, upon the entry without the prior written consent of such Locked-Up Shareholder into any amendment or modification of the Merger Agreement which results in a decrease in the Merger Consideration or imposes any material restrictions or material constraints on the payment of the consideration to be paid for the Gilat Shares.
How Proxies are Counted; Abstentions and Broker Non-Votes
If you properly execute and return the form of proxy to Gilat prior to the General Meeting, each person named as proxy will follow your instructions. If you properly execute and return the form of proxy to Gilat prior to the General Meeting without indicating how you intend to vote with respect to the Merger Proposal, the Gilat Shares represented by the proxy will be counted as being present for quorum purposes, but not be treated as having been voted in respect of the Merger Proposal and will have no effect on the voting with respect to the Merger Proposal.
 
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Broker non-votes and abstentions will be counted as present at the General Meeting for the purpose of determining whether a quorum is present. A broker non-vote occurs when a bank, broker or other nominee holding Gilat Shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions from the beneficial owner. While counted for quorum purposes, abstentions and broker non-votes will not be treated as voting shares and will not have any effect on whether the requisite vote is obtained for all matters placed before shareholders for their vote. None of the proposals at the General Meeting allow for discretionary voting by banks, brokers or other nominees.
 
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Summary Selected Consolidated Historical Financial Data
Summary Selected Consolidated Historical Financial Data of Comtech
The following tables present summary selected consolidated historical financial data for Comtech, as of and for each of the fiscal years of Comtech ended July 31, 2019, 2018 and 2017 and as of, and for the six months ended, January 31, 2020 and 2019. The historical consolidated statement of operations data set forth with respect to the fiscal years ended July 31, 2019, 2018 and 2017, and the consolidated balance sheet data as of July 31, 2019 and 2018, have been derived from the audited consolidated financial statements included in Comtech’s Annual Report on Form 10-K for the year ended July 31, 2019, which is incorporated by reference into this proxy statement/prospectus, and have been prepared in accordance with generally accepted accounting principles (as applied in the United States, “GAAP”). The consolidated statements of operations data for the six months ended January 31, 2020 and 2019 and the consolidated balance sheet data as of January 31, 2020 have been derived from Comtech’s unaudited consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarterly period ended January 31, 2020, which is incorporated by reference into this proxy statement/prospectus. The unaudited interim financial statements have been prepared on a basis consistent with Comtech’s audited financial statements and, in the opinion of Comtech’s management, include all adjustments that Comtech’s management considers necessary for the fair statement of the information for the unaudited periods.
The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in Item 8, “Financial Statements and Supplementary Data,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Comtech’s Annual Report on Form 10-K for the fiscal year ended July 31, 2019 and quarterly report on Form 10-Q for the six months ended January 31, 2020, together with the other information contained therein. See “Where You Can Find More Information.”
Six Months Ended
January 31,
Fiscal Year Ended July 31,
(In thousands, except per share amounts)
2020
2019
2019
2018
2017
(Unaudited)
Consolidated Statement of Operations Data:
Net sales
$ 331,921 $ 324,977 $ 671,797 $ 570,589 $ 550,368
Cost of sales
207,752 205,963 424,357 346,648 332,183
Gross profit
124,169 119,014 247,440 223,941 218,185
Expenses:
Selling, general and administrative
61,225 63,834 128,639 113,922 116,080
Research and development
28,601 27,193 56,407 53,869 54,260
Amortization of intangibles
10,435 8,577 18,320 21,075 22,823
Settlement of intellectual property litigation
(3,204) (3,204) (12,020)
Acquisition plan expenses
8,414 2,908 5,871
108,675 99,308 206,033 188,866 181,143
Operating income
15,494 19,706 41,407 35,075 37,042
Other expenses:
Interest expense
3,420 4,936 9,245 10,195 11,629
Write-off of deferred financing costs
3,217 3,217
Interest (income) and other
(71) 15 35 254 (68)
Income before provision for (benefit from) income taxes
12,145 11,538 28,910 24,626 25,481
Provision for (benefit from) income taxes
2,262 244 3,869 (5,143) 9,654
Net income
$ 9,883 $ 11,294 $ 25,041 $ 29,769 $ 15,827
 
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Six Months Ended
January 31,
Fiscal Year Ended July 31,
(In thousands, except per share amounts)
2020
2019
2019
2018
2017
(Unaudited)
Net income per share:
Basic
$ 0.40 $ 0.47 $ 1.04 1.25 $ 0.68
Diluted
$ 0.40 $ 0.47 $ 1.03 1.24 $ 0.67
Weighted average number of common shares outstanding – basic
24,607 24,017 24,124 23,825 23,433
Weighted average number of common and common equivalent shares outstanding – diluted
24,904 24,245 24,302 24,040 23,489
Consolidated Balance Sheet Data:
Total assets
$ 949,942 $ 843,327 $ 887,711 $ 845,157 $ 832,063
Working capital
126,400 156,072 134,967 114,477 96,833
Debt, including finance leases and other obligations
158,464 176,274 165,757 167,899 195,802
Other liabilities, non-current
17,048 3,456 18,822 4,117 2,655
Stockholders’ equity
551,203 512,877 535,082 505,684 480,150
Summary Selected Consolidated Historical Financial Data of Gilat
The following tables present summary selected consolidated historical financial data for Gilat, as of and for each of the fiscal years of Gilat ended December 31, 2019, 2018 and 2017 and as of and for the six months ended June 30, 2019 and 2018. The summary selected historical consolidated statement of operations data set forth with respect to the fiscal years ended December 31, 2019, 2018 and 2017, and the consolidated balance sheet data as of December 31, 2019 and 2018 have been derived from the audited consolidated financial statements included in Gilat’s Annual Report on Form 20-F for the year ended December 31, 2019, which is incorporated by reference into this proxy statement/prospectus, and have been prepared in accordance with GAAP. The financial data for the six months ended June 30, 2019 and 2018 and as of June 30, 2019 have been derived from Gilat’s unaudited condensed interim consolidated financial statements included as Exhibit 99.1 to its Report on Form 6-K furnished to the SEC on September 26, 2019, which financial information is incorporated by reference into this proxy statement/prospectus. The unaudited interim financial information has been prepared on a basis consistent with Gilat’s audited consolidated financial statements and, in the opinion of Gilat’s management, include all adjustments that Gilat’s management considers necessary for the fair statement of the information for the unaudited periods. Gilat’s balance sheet data for certain prior fiscal and interim periods were not referenced.
The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in Gilat’s Annual Report on Form 20-F for the year ended December 31, 2019 and its Form 6-K furnished to the SEC on September 26, 2019. See “Where You Can Find More Information.”
Six Months Ended
June 30,
Fiscal Year Ended December 31,
(In thousands, except share and per share amounts)
2019
2018
2019
2018
2017
(Unaudited)
Consolidated Statement of Operations Data:
Revenues
$ 121,794 $ 133,882 $ 263,492 $ 266,391 $ 282,756
Cost of revenues
76,239 90,053 167,615 172,354 200,261
Gross profit
45,555 43,829 95,877 94,037 82,495
 
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Six Months Ended
June 30,
Fiscal Year Ended December 31,
(In thousands, except share and per share amounts)
2019
2018
2019
2018
2017
(Unaudited)
Operating expenses:
Research and development, net
15,398 15,920 30,184 33,023 28,014
Selling and marketing
11,288 11,716 21,488 22,706 23,759
General and administrative
9,527 8,389 18,633 17,024 19,861
Total operating expenses
36,213 36,025 70,305 72,753 71,634
Operating income
9,342 7,804 25,572 21,284 10,861
Financial expenses, net
(1,400) (2,188) (2,617) (4,298) (4,307)
Income before taxes on income
7,942 5,616 22,955 16,986 6,554
Taxes on income (tax benefit)
1,713 1,154 (13,583) (1,423) (247)
Income $ 6,229 $ 4,462 $ 36,538 $ 18,409 $ 6,801
Income per share (basic)
$ 0.11 $ 0.08 $ 0.66 $ 0.34 $ 0.12
Income per share (diluted)
$ 0.11 $ 0.08 $ 0.65 $ 0.33 $ 0.12
Weighted average number of shares used in computing earnings per share:
Basic
55,262,453 54,811,893 55,368,703 54,927,272 54,680,822
Diluted
56,014,927 55,614,782 56,030,976 55,752,642 54,851,967
Consolidated Balance Sheet Data:
Working capital
$ 86,406 $ 101,620 $ 102,529 $ 105,765 $ 92,035
Total assets
365,533 371,810 391,836 394,747 391,556
Current maturities of long term loans
4,325 4,466 4,096 4,458 4,479
Long term loan, net of current maturities
4,000 8,333 4,000 8,098 12,582
Other long-term liabilities
10,759 8,084 13,293 7,229 9,007
Shareholders’ equity
223,156 223,143 253,588 239,072 218,322
(1)
On January 1, 2018, Gilat adopted the new revenue standards (Topic 606) using a modified retrospective method with the cumulative effect recognized in the accumulated deficit as of December 1, 2018. The consolidated financial statements for the year ended December 31, 2018 were reported under Topic 606, whereas the consolidated financial statements for 2017 and prior years are reported under Topic 605. See Note 2z, “Recently Adopted Accounting Pronouncements” to the consolidated financial statements of Gilat as of December 31, 2019, included in Gilat’s Annual Report on Form 20-F for the year ended December 31, 2019, which is incorporated by reference into this proxy statement/prospectus, for more details.
(2)
On January 1, 2019, Gilat adopted the new lease standards (Topic 842) using a modified retrospective method, by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts have not been adjusted and continue to be reported in accordance with ASC 840. See Note 2z, “Recently Adopted Accounting Pronouncements” to the consolidated financial statements of Gilat as of December 31, 2019, included in Gilat’s Annual Report on Form 20-F for the year ended December 31, 2019, which is incorporated by reference into this proxy statement/​prospectus, for more details.
 
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Selected Unaudited Pro Forma Condensed Combined Financial Information
The following tables set forth selected unaudited pro forma condensed combined financial information giving effect to the planned Merger of Comtech and Gilat. The unaudited pro forma condensed combined statements of operations for the six months ended January 31, 2020, and the fiscal year ended July 31, 2019, give effect to the Merger as if it had been consummated on August 1, 2018, the beginning of Comtech’s most recently completed fiscal year. The unaudited pro forma condensed combined balance sheet as of January 31, 2020 gives effect to the Merger as if it had been consummated on January 31, 2020.
The summary unaudited pro forma condensed combined financial information is provided for illustrative purposes only and does not purport to represent what the actual consolidated results of operations or consolidated financial condition of the combined company would have been had the Merger actually occurred on the dates indicated, nor do they purport to project the future consolidated results of operations or consolidated financial condition of the combined company for any future period or as of any future date.
The summary unaudited pro forma condensed combined financial data as of and for the six months ended January 31, 2020 and for the year ended July 31, 2019 are derived from the unaudited pro forma condensed combined financial information included in “Unaudited Pro Forma Condensed Combined Financial Information” and should be read in conjunction with that information. The unaudited pro forma adjustments are based upon available information and certain assumptions that Comtech believes are reasonable under the circumstances. The unaudited pro forma condensed combined financial information also gives effect to the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements included in this proxy statement/prospectus. For more information, please see “Unaudited Pro Forma Condensed Combined Financial Information.”
(In thousands, except per share amounts)
Six Months Ended
January 31, 2020
Fiscal Year Ended
July 31, 2019
Condensed Combined Statement of Operations Data:
Net sales
$ 472,990 $ 923,931
Net income
$ 35,006 $ 25,188
Net income per share:
Basic
$ 1.19 $ 0.87
Diluted
$ 1.18 $ 0.87
(In thousands)
As of
January 31, 2020
Condensed Combined Balance Sheet Data:
Cash and cash equivalents
$ 45,000
Total assets
$ 1,535,517
Working capital
$ 152,008
Debt, including finance leases and other obligations
$ 512,394
Other liabilities, non-current
$ 17,156
Stockholders’ equity
$ 628,247
 
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Unaudited Comparative Per Share Data
Presented below are Comtech’s historical per share data for the six months ended January 31, 2020 and the fiscal year ended July 31, 2019, Gilat’s historical per share data for the six months ended December 31, 2019 and the twelve months ended December 31, 2018, unaudited pro forma combined per share data for the six months ended January 31, 2020 and the fiscal year ended July 31, 2019, and unaudited pro forma equivalent data for the six months ended January 31, 2020 and the year ended July 31, 2019. This information should be read together with the consolidated financial statements and related notes of Comtech and Gilat that are incorporated by reference into this proxy statement/prospectus and with the unaudited pro forma condensed combined financial data included in “Unaudited Pro Forma Condensed Combined Financial Information.” The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the Merger had been completed as of the beginning of the periods presented or on the dates presented, nor is it necessarily indicative of the future operating results or financial position of the combined company. The historical book value per share is computed by dividing total stockholders’ equity by the number of shares outstanding at the end of the relevant period. The pro forma net income per share of the combined company is computed by dividing the pro forma net income by the pro forma weighted average number of diluted shares outstanding. The pro forma book value per share of the combined company is computed by dividing total pro forma stockholders’ equity by the pro forma number of shares outstanding at the end of the period.
Six months ended
January 31, 2020
Fiscal year ended
July 31, 2019
COMTECH HISTORICAL DATA
Historical per share of common stock
Basic net income per share
$ 0.40 $ 1.04
Diluted net income per share
$ 0,40 $ 1.03
Book value per share (at period end)
$ 22.30 $ 22.07
Six months ended
December 31, 2019
Twelve months ended
December 31, 2018
GILAT HISTORICAL DATA
Historical per ordinary share
Basic net income per share
$ 0.55 $ 0.34
Diluted net income per share
$ 0.54 $ 0.33
Book value per share (at period end)
$ 4.57 $ 4.33
Six months ended
January 31, 2020
Fiscal year ended
July 31, 2019
COMTECH PRO FORMA COMBINED DATA
Unaudited pro forma per share of common stock
Basic net income per share
$ 1.19 $ 0.87
Diluted net income per share
$ 1.18 $ 0.87
Book value per share (at period end)
$ 21.34 $ 21.69
Six months ended
January 31, 2020
Fiscal year ended
July 31, 2019
GILAT PRO FORMA EQUIVALENT DATA(1)
Unaudited pro forma per ordinary share
Basic net income per share
$ 0.10 $ 0.07
Diluted net income per share
$ 0.10 $ 0.07
Book value per share (at period end)
$ 1.80 $ 1.83
(1)
The pro forma equivalent Gilat ordinary share amounts were calculated by multiplying the pro forma combined amount by the Exchange Ratio of 0.08425. The exchange ratio does not include the $7.18 per share that is the Cash Merger Consideration portion of the Merger Consideration.
 
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Unaudited Comparative Market Value and Dividend Information
The following table presents trading information for Gilat Shares on Nasdaq and the TASE and Comtech Common Stock on Nasdaq on (i) January 17, 2020, the last trading day prior to market speculation regarding the Merger, (ii) January 28, 2020, the last trading day before announcement of the Merger, and (iii) March 30, 2020, the most recent practicable trading day before the date of this proxy statement/​prospectus. For illustrative purposes, the following table also provides the equivalent per share value of the Merger Consideration, which is equal to (A) $7.18 in cash, without interest, plus (B) 0.08425 of a share of Comtech Common Stock, for each Gilat Share outstanding as of such dates.
Gilat Shares
Comtech
Common Stock
Equivalent
Per-Share Value
Date
High
Low
Close
High
Low
Close
High
Low
Close
January 17, 2020
$ 9.68 $ 9.15 $ 9.15 $ 36.89 $ 36.19 $ 36.26 $ 10.29 $ 10.23 $ 10.23
January 28, 2020
$ 10.28 $ 10.05 $ 10.11 $ 37.34 $ 36.66 $ 37.10 $ 10.33 $ 10.27 $ 10.31
March 30, 2020
$ 7.49 $ 7.13 $ 7.43 $ 15.11 $ 14.01 $ 14.38 $ 8.45 $ 8.36 $ 8.39
The market prices of Gilat Shares and shares of Comtech Common Stock fluctuate, and the value of the Merger Consideration will fluctuate with the market price of the Comtech Common Stock. As a result, we urge you to obtain current market quotations of the Gilat Shares and the Comtech Common Stock.
The table below sets forth in comparative columnar form, the cash dividends declared for the most recent fiscal year and interim period for Comtech on a historical and pro forma per share basis and for Gilat on a historical and equivalent pro forma per share basis.
Cash dividends per share
Six Months
Ended
January 31,
2020
Twelve Months
Ended
July 31,
2019
Comtech Historical(1)
$ 0.20 $ 0.40
Gilat Historical(2)
$ 0.45
Comtech Pro Forma Combined
$ 0.20 $ 0.40
Gilat Pro Forma Equivalent
$ 0.02 $ 0.03
(1)
On December 4, 2019 and March 4, 2020, Comtech announced that its Board of Directors declared a quarterly cash dividend of  $0.10 per share, payable on February 14, 2020 and May 15, 2020, to shareholders of record at the close of business on January 15, 2020 and April 15, 2020, respectively.
(2)
In April 2019, Gilat paid a cash dividend in the amount of  $0.45 per Gilat Share (approximately $25 million in the aggregate). Such dividend was the first time that Gilat paid a dividend, but Gilat did not adopt a general policy regarding the distribution of dividends and made no statements as to the distribution of dividends.
Under the terms of the Merger Agreement, during the period before the Effective Time, Gilat is not permitted to declare, authorize, set aside or pay any dividend or other distribution without the prior consent of Comtech (not to be unreasonably withheld, conditioned or delayed).
 
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus and the documents incorporated by reference into this proxy statement/​prospectus contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that are not limited to historical facts, but reflect Comtech’s and Gilat’s current beliefs, expectations or intentions regarding future events. Words such as “may,” “will,” “could,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “seek,” “estimate,” “predict,” “potential,” “pursue,” “target,” “continue,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the manner in which the parties plan to effect the proposed Merger; the expected benefits, synergies and costs of the proposed Merger; management plans relating to the proposed Merger; the expected timing of the completion of the proposed Merger; the parties’ ability to complete the proposed Merger considering the various closing conditions, including conditions related to regulatory and Gilat shareholder approvals; the plans, strategies and objectives of management for future operations; product development, product extensions, product integration, complementary product offerings and growth opportunities in certain business areas; the potential future financial impact of the proposed Merger; and any assumptions underlying any of the foregoing. Without limiting the generality of the preceding sentence, certain statements contained in the “The Merger — Background of the Merger,” “The Merger — Gilat’s Reasons for the Merger; Recommendation of the Gilat Board,” “The Merger — Certain Unaudited Projections of Gilat” contain forward-looking statements.
All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of Comtech and Gilat and are difficult to predict. In addition to the risks and uncertainties described in “Risk Factors” and those described in any documents that are incorporated by reference into this proxy statement/prospectus, such risks and uncertainties include, among others: (1) the risk that the conditions to the Closing are not satisfied, including the risk that required approvals for the Merger from governmental authorities or the shareholders of Gilat are not obtained; (2) changes or circumstances that could give rise to the termination of the Merger Agreement; (3) the risk that the value of the Stock Merger Consideration will fluctuate over time; (4) litigation relating to the Merger, if any; (5) uncertainties as to the timing of the consummation of the Merger and the ability of each party to consummate the Merger; (6) risks that the proposed Merger disrupts the current plans and operations of Gilat or Comtech; (7) the ability of Gilat and Comtech to retain and hire key personnel; (8) competitive responses to the proposed Merger and the impact of competitive products; (9) unexpected costs, charges or expenses resulting from the Merger; (10) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger; (11) the combined company’s ability to achieve the financial and operating results, growth prospects and synergies expected from the Merger, as well as delays, challenges and expenses associated with integrating the existing businesses of Comtech and Gilat; (12) the combined company’s ability to maintain and improve relationships with customers, suppliers and other third parties following the Merger; (13) the terms and availability of the indebtedness that may be incurred in connection with the Merger; (14) the timing and funding of government contracts; (15) risks associated with international sales; (16) risks associated with legal proceedings, customer claims for indemnification and other similar matters; (17) risks associated with Comtech’s obligations under its credit facility; (18) risks associated with the outbreak and global spread of the coronavirus (COVID-19) pandemic; and (19) legislative, regulatory, technological, political and economic developments, including changing business conditions in the industries in which Comtech and Gilat operate, including the semiconductor industry, and overall economy as well as the financial performance and expectations of Comtech’s and Gilat’s existing and prospective customers.
Comtech and Gilat caution that the foregoing list of factors is not exclusive and that you should not place undue reliance on any forward-looking statement. All subsequent written and oral forward-looking statements concerning Comtech, Gilat, the proposed Merger or other matters and attributable to Comtech or Gilat or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements above. All forward-looking statements contained in this proxy statement/prospectus and the documents incorporated by reference herein are made only as of the date of the document in which they are contained and, except as required by law, neither Comtech nor Gilat undertakes any obligation to update publicly any of these forward-looking statements to reflect events or circumstances that may arise after the date hereof.
 
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RISK FACTORS
In addition to the other information included and incorporated by reference into this proxy statement/​prospectus, including the matters addressed in “Special Note Regarding Forward-Looking Statements,” you should carefully consider the following risks before deciding whether to vote for the Merger Proposal. In addition, you should read and consider the risks associated with each of the businesses of Comtech and Gilat because these risks may also affect the operations and financial results of the combined company. The risks associated with Comtech’s business can be found in Comtech’s Annual Report on Form 10-K for the fiscal year ended July 31, 2019, and any amendments thereto, as such risks may be updated or supplemented in Comtech’s subsequently filed Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. The risks associated with Gilat’s business can be found in Gilat’s Annual Report on Form 20-F for the fiscal year ended December 31, 2019 and any amendments thereto, as such risks may be updated or supplemented in Gilat’s Annual Reports on Form 20-F or subsequently filed or furnished Reports on Form 6-K. Such filings by Comtech and Gilat will be incorporated by reference into this proxy statement/prospectus to the extent described in “Where You Can Find More Information.” You should also read and consider the other information in this proxy statement/prospectus and the other documents incorporated by reference into this proxy statement/prospectus. For more information, see “Where You Can Find More Information.”
Risks Relating to COVID-19 Pandemic
The COVID-19 pandemic has had, and is likely to continue to have, an adverse effect on Gilat’s and Comtech’s respective businesses.
In December 2019, a strain of COVID-19 surfaced in Wuhan, China and resulted in an outbreak with infections throughout China and abroad. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The spread of COVID-19 has affected businesses globally as governments take certain emergency measures to combat its spread, including implementation of travel bans and closures of factories, public buildings, and businesses. While the full impact of this outbreak is not yet known, the business and operations of Comtech and Gilat have been, and are likely to continue to be adversely affected by conditions caused by COVID-19.
Impact on Gilat
The ongoing COVID-19 pandemic has had an adverse effect on Gilat’s industry and the markets in which it operates. The COVID-19 outbreak has significantly impacted the travel and aviation markets in which Gilat’s significant inflight connectivity (“IFC”) customers operate and has resulted in a slowdown of Gilat’s business with some of these customers. Gilat has experienced postponed orders and suspended decision making in other markets that are likely to be negatively affected by the COVID-19. As a result, during the first quarter of 2020, Gilat has experienced a significant reduction in its business and expects to record a loss for the quarter.
Further, the guidance of social distancing and the requirements to work from home in key territories such as Israel, Peru, China, California, Colombia, Australia, Bulgaria and in other countries, in addition to greatly reduced travel globally, has resulted in a substantial curtailment of business activities, which has affected and is likely to continue to affect Gilat’s ability to conduct fieldwork as well as deliver products and services. While the majority of Gilat’s products are manufactured outside of China, certain components and materials for Gilat’s products are manufactured or procured in China and Gilat also has other operations in Asia.
Gilat is unable at this time to estimate the extent of the effect of the COVID-19 on its business. In order to mitigate the impact of the decline in business, Gilat has adopted a plan to reduce its expenses, including a reduction in its headcount as well as other cost savings measures. This public health threat is likely to continue to adversely impact Gilat by its negative impact on Gilat’s ability to generate revenues due to reduced end-market demand from governments, enterprises and consumers, leading to order delays and cancellations. In addition, certain of Gilat’s sales and support teams are unable to travel or meet with customers and the threat has caused operating, manufacturing, supply chain and project development delays and disruptions, labor shortages, travel and shipping disruptions and shutdowns (including as a result of government regulation and prevention measures).
 
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Given the potential impact on Gilat’s businesses as a result of the outbreak, the values or the recoverable amounts of certain assets subsequent to the reporting date may be less than their carrying amounts as of December 31, 2019. The potential decline in value is determined to be a non-adjusting event as Gilat management concluded that the cause of the shut down in the series of events that led to the disruptions in operations is not the outbreak itself, but rather the measures taken by the government after the reporting date. Because the outbreak may also result in uncertainties in relation to the assumptions and estimations associated with the measurement of various assets and liabilities in the financial statements that Gilat may not have previously recognized or disclosed, the occurrence of the outbreak has certainly added additional risks that the carrying amounts of assets and liabilities may require certain adjustments within the next financial year which financial effect cannot be reasonably estimated at this stage.
Impact on Comtech
To date, the primary impacts of the COVID-19 pandemic on Comtech have been significant order delays and the inability of Comtech’s sales and marketing teams to travel and/or meet with customers. Also, due to travel bans and/or forced shutdowns at customer locations, Comtech has encountered difficulty in delivering products that had been previously ordered by its customers. As a result of these conditions, Comtech has taken steps to reduce both direct and indirect costs at certain of its facilities. Additional cost reduction measures may be required.
In addition, various industries and sectors in which Comtech’s customers operate have been effected by the COVID-19 pandemic, including: (i) satellite operators and integrators that have announced capital and operating spending reductions, (ii) airlines and cruise lines that are suspending or significantly reducing operations and related spending, (iii) end customers dependent on oil revenues that are facing declining oil prices and a decline in demand, and (iv) government end customers prioritizing healthcare and unemployment spending over telecommunications projects. It is likely that these industry and sector shifts will continue for a prolonged period, and Comtech could see a decrease in demand for its products and a resulting material adverse impact on its business, financial condition, results of operations, or cash flows.
Although Comtech has been deemed an essential business by the U.S. government and is exempt from many laws and regulations relating to COVID-19, Comtech has modified its business practices (including prohibiting employee travel, implementing work-from-home policies and requiring social distancing) with a view to the safety of its employees, customers, partners and suppliers. There is no certainty, however, that such measures will be sufficient to mitigate the risks posed by the disease, and Comtech’s ability to perform critical functions could be harmed.
Although Comtech’s supply chain has not yet been impacted, the impact of COVID-19 could negatively impact Comtech’s supply chain and cause delays in the delivery of raw materials, components and other supplies that Comtech needs to conduct its operations. Comtech may be unable to locate replacement materials, components or other supplies, and ongoing delays could further reduce sales and adversely affect its results of operations.
The outbreak has significantly increased economic uncertainty. It has caused an economic slowdown of as yet uncertain proportions, and it is possible that it could cause a global recession. Risks related to an economic slowdown or recession are described in Comtech’s risk factor titled “If global economic business and political conditions deteriorate as compared to the current environment, it could have a material adverse impact on our business outlook and our business, operating results and financial condition” under “Risk Factors” in Comtech’s Annual Report on Form 10-K for the year ended July 31, 2019.
Risk Factors Relating to the Merger
The Merger is subject to a number of conditions, some of which are outside of the parties’ control, and, if these conditions are not satisfied, the Merger Agreement may be terminated and the Merger may not be completed.
The obligation of each party to complete the Merger is subject to the fulfillment of a number of conditions. Among these is the condition that a Material Adverse Effect has not occurred with respect to the other party. Under the Merger Agreement, a Material Adverse Effect is defined as any fact, event, occurrence, change, development or effect (any such item, an “Effect”) that, individually or in the aggregate
 
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when taken together with all other Effects that exist or have occurred prior to the date of determination of the occurrence of a Material Adverse Effect is or would reasonably be expected to be material and adverse to the business, assets, Liabilities (as defined), financial condition or results of operations of such party and its Subsidiaries (as defined), taken as a whole. There can be no assurance that a Material Adverse Effect with respect to Gilat or Comtech will not have occurred prior to completion of the Merger.
In addition, the Merger Agreement provides that the respective obligations of the parties to consummate the Merger shall be subject to the expiration or termination of applicable waiting periods applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), and any affirmative exemption or approval of a specified national antitrust regulatory authority shall have been obtained. Although the applicable waiting period under the HSR Act expired at midnight on March 19, 2020, the affirmative exemption or approval of the Russian antitrust regulatory authority has not yet been obtained.
Other conditions to the parties’ respective obligations to complete the merger are the following:

approval of the Merger Agreement and the transactions contemplated thereby by Gilat shareholders as described in this proxy statement/prospectus;

absence of any law, order, judgment, injunction or other ruling, instituted by a governmental entity of competent jurisdiction, that is then in effect of enjoining, making unlawful or otherwise prohibiting the consummation of the Merger;

obtainment of ISA Exemptions (as such term is defined in the Merger Agreement);

approval for listing of the shares of Comtech Common Stock to be issued in the Merger on Nasdaq, subject to official notice of issuance;

that this registration statement on Form S-4 has been declared by the SEC to be effective under the Securities Act and no stop order suspending the effectiveness of the Form S-4 shall have been issued by the SEC and no proceedings for that purpose shall have been initiated or threatened by the SEC that have not been withdrawn; and

subject to certain materiality standards contained in the Merger Agreement, the accuracy of representations and warranties of Gilat and Comtech, respectively, and material performance by Gilat and Comtech of their respective covenants contained in the Merger Agreement.
The required satisfaction of the foregoing conditions could delay the completion of the Merger for a significant period of time or prevent it from occurring. Any delay in completing the Merger could cause Comtech to fail to realize some or all of the benefits that the parties expect Comtech to achieve following the Merger. Further, there can be no assurance that the conditions to the Closing will be satisfied or waived or that the Merger will be completed.
In addition, if the Merger is not completed by July 29, 2020 (subject to a potential extension to October 29, 2020), either Comtech or Gilat may choose to terminate the Merger Agreement. Comtech or Gilat may also elect to terminate the Merger Agreement in certain other circumstances, and the parties may mutually decide to terminate the Merger Agreement at any time prior to the Effective Time, before or after Gilat shareholder approval is received, as applicable. For more information, see “The Merger Agreement — Termination of the Merger Agreement.”
The value of the stock portion of the Merger Consideration that Gilat shareholders will receive in the Merger has fluctuated and will continue to fluctuate over time.
Although Gilat shareholders are entitled to receive a fixed fraction of a share of Comtech Common Stock in connection with the Merger, the value of such stock portion of the Merger Consideration that Gilat shareholders will receive in the Merger has fluctuated and will continue to fluctuate over time. At the Effective Time, subject to the terms of the Merger Agreement, (i) each Gilat Share issued and outstanding immediately prior to the Effective Time will be converted into the right to receive a combination of  (A) $7.18 in cash, without interest, plus (B) 0.08425 of a validly issued, fully paid and nonassessable share of the Comtech Common Stock, with cash payable in lieu of fractional shares of the Comtech Common Stock, subject to applicable withholding taxes.
 
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Time will elapse between each of the date of this proxy statement/prospectus, the date on which Gilat shareholders vote to approve and adopt the Merger Proposal at the meeting and the date on which Gilat shareholders are entitled to receive cash from Comtech and the Comtech Common Stock. Due to the negative effect of the COVID-19 pandemic, the market values of the Comtech Common Stock and the Gilat Shares have significantly decreased since the announcement of the Merger and may further fluctuate as a result of a variety of factors, including the continuing effects of COVID-19, general market and economic conditions, changes in Comtech’s or Gilat’s businesses, operations and prospects, catastrophic events, both natural and man-made, and regulatory considerations. Many of these factors are outside the control of Gilat and Comtech. There will be no adjustment to the exchange ratio of the stock consideration (except for adjustments to reflect the effect of any stock split, reverse stock split, stock dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the Comtech Common Stock) and the parties do not have a right to terminate the Merger Agreement based upon changes in the market price of the Comtech Common Stock. Consequently, at the time that Gilat shareholders must decide whether to approve and adopt the Merger Proposal, they will not know the market price of the Comtech Common Stock they will receive and the market price of the Gilat Shares that they will surrender when the Merger is actually consummated. The value of the Comtech Common Stock received by Gilat shareholders upon consummation of the Merger will depend on the market price of the Comtech Common Stock at that time, and the value of the Gilat Shares surrendered by Gilat shareholders will depend on the market price of the Gilat Shares at that time, both of which have declined from the date the Merger Agreement was signed.
Failure to complete the Merger could negatively affect the share prices and the future business and financial results of either or both of Comtech and Gilat.
If the Merger is not completed, the ongoing businesses of either or both of Comtech and Gilat may be adversely affected. Additionally, if the Merger is not completed and the Merger Agreement is terminated, in certain circumstances Gilat may be required to pay Comtech a termination fee of  $21,675,000. For more information, see “The Merger Agreement — Termination of the Merger Agreement” and “The Merger Agreement — Termination Fees.” In addition, Comtech and Gilat have incurred and will continue to incur significant transaction expenses in connection with the Merger regardless of whether the Merger is completed. Furthermore, either or both of Comtech or Gilat may experience negative reactions from the financial markets, including negative impacts on their stock prices, or negative reactions from their customers, suppliers or other business partners, should the Merger not be completed.
The foregoing risks, or other risks arising in connection with the failure to consummate the Merger, including the diversion of management attention from conducting the businesses of the respective companies and pursuing other opportunities during the pendency of the Merger, may have a material adverse effect on the businesses, operations, financial results and stock prices of either or both of Comtech and Gilat.
Litigation against Comtech and Gilat, or the members of the Gilat Board, could prevent or delay the completion of the Merger or result in the payment of damages following completion of the Merger.
Various legal proceedings have been initiated by purported shareholder plaintiffs against Gilat and its directors, against Comtech and its principal executive officer and against the Merger Sub with respect to the Merger and the disclosure contained in this proxy statement/prospectus. The results of any such potential legal proceedings are difficult to predict and could delay or prevent the Merger from becoming effective in a timely manner. The existence of litigation related to the Merger could affect the likelihood of obtaining the required approval from Gilat shareholders. Moreover, any litigation could be time consuming and expensive, could divert Comtech’s and Gilat’s management’s attention away from their respective businesses and, if any lawsuit is adversely resolved against any of Comtech, Gilat or the members of their respective boards of directors, could have a material adverse effect on Comtech’s or Gilat’s financial condition.
One of the conditions to the Closing is the absence of any law, order, judgment, injunction or other ruling, instituted by a governmental entity of competent jurisdiction, that is then in effect of enjoining, making unlawful or otherwise prohibiting the consummation of the Merger. Consequently, if a settlement or other resolution is not reached in any lawsuit that is filed and a claimant secures injunctive or other relief prohibiting, delaying or otherwise adversely affecting either party’s ability to complete the Merger on the
 
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terms contemplated by the Merger Agreement, then such injunctive or other relief may prevent the Merger from becoming effective in a timely manner or at all.
The Merger Agreement contains provisions that limit Gilat’s ability to pursue alternatives to the Merger, could discourage a potential competing acquiror of Gilat from making an alternative transaction proposal and, in specified circumstances, could require Gilat to pay a termination fee to Comtech.
The Merger Agreement prohibits Gilat and its representatives from soliciting, participating in negotiations with respect to or approving or recommending any third-party proposal for an alternative transaction, subject to exceptions set forth in the Merger Agreement relating to the receipt of certain unsolicited offers. If the Merger Agreement is terminated by Comtech due to a change in the Gilat Board’s recommendation regarding the Merger, due to Gilat’s material breach of its non-solicitation obligations, or due to Gilat accepting a superior proposal, among other reasons, then Gilat may be required to pay a termination fee of  $21,675,000 to Comtech. For more information, see “The Merger Agreement — Termination of the Merger Agreement” and “The Merger Agreement — Termination Fees.”​
These provisions could discourage a potential third-party acquiror or merger partner that might have an interest in acquiring all or a significant portion of Gilat or pursuing an alternative transaction from considering or proposing such a transaction, even if it were prepared to pay consideration with a higher per share cash or market value than the consideration to be paid in the Merger, or might result in a potential third-party acquiror or merger partner proposing to pay a lower price to Gilat shareholders than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.
If the Merger Agreement is terminated and Gilat determines to seek another business combination, Gilat may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Merger.
The Merger is subject to the expiration of applicable waiting periods under and the receipt of approvals, consents or clearances from antitrust regulatory authorities that may impose conditions that could have an adverse effect on Comtech or Gilat or, if not obtained, could prevent completion of the Merger.
The Closing may be subject to the exemption or approval of applicable government entities. In deciding whether to grant the required regulatory approvals, consents or clearances, the relevant governmental entities will consider the effect of the Merger on competition within their relevant jurisdiction. The terms and conditions of the approvals, consents and clearances that are granted may impose requirements, limitations or costs or place restrictions on the conduct of Comtech’s business and which may adversely affect the financial position and prospects of Comtech and its ability to achieve the cost savings and other synergies projected to result from the Merger.
Under the Merger Agreement, Comtech and Gilat have agreed to use their reasonable best efforts to obtain all necessary actions or non-actions, waivers, consents, approvals, orders and authorizations from governmental entities, as may be required under any applicable antitrust laws or otherwise and therefore may be required to comply with conditions or limitations imposed by governmental antitrust authorities. However, there can be no assurance that antitrust regulators will not impose unanticipated conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of delaying completion of the Merger or imposing additional costs on or limiting the revenues of Comtech following the completion of the Merger and which may adversely affect the financial position and prospects of Comtech and its ability to achieve the cost savings and other synergies projected to result from the Merger. For a more detailed description of the regulatory review process, see “The Merger — Competition Clearances Required for the Merger.”
Until the completion of the Merger or the termination of the Merger Agreement in accordance with its terms, in consideration of the agreements made by the parties in the Merger Agreement, Gilat is prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to Gilat and its shareholders.
Until the Merger is completed, the Merger Agreement restricts Gilat from taking specified actions without the consent of Comtech (not to be unreasonably withheld, conditioned or delayed), and requires
 
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Gilat to carry on its business in all material respects in the ordinary course of business. These restrictions may prevent Gilat from making appropriate changes to its businesses, retaining its workforce, paying dividends or pursuing attractive business opportunities that may arise prior to the completion of the Merger. For more information, see “The Merger Agreement — Restrictions on Gilat’s Business Pending the Closing.”
After the Merger, Gilat shareholders will have a significantly lower ownership and voting interest in Comtech than they currently have in Gilat, and will exercise less influence over management.
Based on the number of Gilat Shares and Comtech Common Stock issued and outstanding as of March 19, 2020, it is expected that, former Gilat shareholders will receive shares of the Comtech Common Stock in the Merger representing approximately 16.0% of the outstanding shares of the Comtech Common Stock, immediately following the Effective Time. Consequently, Gilat shareholders will have substantially less influence over the management and policies of Comtech than they currently have over Gilat.
The executive officers and directors of Gilat have interests in the Merger that are different from, or in addition to, those of the other Gilat shareholders. Therefore, the executive officers and directors of Gilat may have a conflict of interest in recommending the Merger Proposal being voted on at the meeting.
The directors and executive officers of Gilat have interests in the Merger that may be different from, or in addition to, those of the Gilat shareholders generally. For more information, see “The Merger — Interests of Gilat’s Directors and Executive Officers in the Merger.”
The shares of Comtech Common Stock to be received by Gilat shareholders as a result of the Merger will have different rights from the Gilat Shares.
Upon completion of the Merger, Gilat shareholders will become stockholders of Comtech and their rights as stockholders will be governed by the Comtech Charter, the Comtech Bylaws and Delaware law. The rights associated with Gilat Shares are different from the rights associated with shares of the Comtech Common Stock. For more information, see “Comparison of Rights of Gilat Shareholders and Comtech Stockholders.”
Gilat shareholders may be subject to Israeli capital gains tax in connection with the Merger and absent receipt of a ruling or exemption, will generally be subject to Israeli tax withholding on the gross Merger Consideration.
As a consequence of the Merger, holders of Gilat Shares will be treated as having sold their Gilat Shares in the Merger.
When an Israeli company is sold, regardless of whether the consideration in the sale is cash or stock, its shareholders are generally subject to Israeli taxation. The ITO distinguishes between ‘Real Capital Gain’ and ‘Inflationary Surplus’. The Inflationary Surplus is the portion of the total capital gain which is equivalent to the increase of the relevant asset’s purchase price which is attributable to the increase in the Israeli CPI or, in certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of sale. The Real Capital Gain is the excess of the total capital gain over the Inflationary Surplus.
The capital gains tax rate applicable to the Real Capital Gain is 25% for individuals, 30% for individuals who are Major Stockholders on the date of sale or on any date falling within the 12-month period preceding that date of sale and 23% for corporations. An additional tax at a rate of three percent on the Real Capital Gain may be imposed upon individual shareholders whose annual income from all sources that is taxable in Israel exceeds a certain amount. The Inflationary Surplus is generally exempt from tax, provided that the shares being sold were acquired after December 31, 1993.
Shareholders of a company, such as Gilat, whose shares are traded on the TASE or on a regulated market outside of Israel, who are non-Israeli residents and purchased their shares after the listing of Gilat’s shares on the TASE or said regulated market outside of Israel, whichever is earlier (which means, in the case of Gilat, non-Israeli residents who purchased Gilat Shares after March 26, 1993), would generally be exempt from Israeli capital gains tax, provided that certain conditions are met (e.g., including that the capital gain is not made through a permanent establishment that the non-Israeli resident shareholder maintains in Israel). In addition, such sale may be exempt from Israeli capital gain tax (or be subject to a reduced tax rate)
 
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under the provisions of an applicable tax treaty between Israel and the seller’s country of residence (subject to the receipt of a valid certificate from the Israel Tax Authority allowing for an exemption or a reduced tax rate).
Gilat has requested tax rulings from the Israel Tax Authority with respect to (i) exemption from withholding of Israeli tax on payments of Merger Consideration payable to Gilat shareholders who are non-Israeli residents and meet certain conditions, (ii) deferral of the obligation of Israeli tax resident holders of Gilat Shares to pay Israeli tax on the exchange of the Gilat Shares for the Comtech Common Stock in accordance with the provisions of Section 104H of the ITO and (iii) the application of Israeli tax withholding and other Israeli tax treatment applicable to holders of Gilat Options and shares issued to certain directors and employees under Section 102 of the ITO and to certain directors and others under Section 3(i) of the ITO. If and when the tax rulings are finalized, Gilat will issue a press release and furnish a Form 6-K or other document with the SEC describing the scope of the exemptions provided by the rulings. There can be no assurance that such rulings will be granted before the Closing or at all or that, if obtained, such rulings will be granted under the conditions requested by Gilat.
Whether or not a particular shareholder is actually subject to Israeli capital gains tax in connection with the Merger, absent receipt by Gilat of a tax ruling from the Israel Tax Authority prior to Closing, all Gilat shareholders will be subject to Israeli tax withholding at the rate of 25% (for individuals) and 23% (for corporations) on the gross Merger Consideration (unless the shareholder requests and obtains an individual certificate of exemption or a reduced tax rate from the Israel Tax Authority, as described below), and Comtech or the exchange agent will withhold and deduct from the Cash Merger Consideration an amount equal to 25%, 23% or such other reduced tax rate as stipulated in the certificate obtained, as applicable, of the gross Merger Consideration received by such shareholder.
The Israeli tax withholding consequences of the Merger to Gilat shareholders and holders of certain Gilat Options and shares issued subject to Section 102 of the ITO may vary depending upon the particular circumstances of each shareholder or holder of Gilat Options or shares issued subject to Section 102 of the ITO, as applicable, and the final tax rulings issued by the Israel Tax Authority. To the extent that tax is withheld on payments to U.S. taxpayers, it is possible that such withheld taxes may not be able to be credited against such taxpayers’ U.S. income tax liability.
You are urged to consult with your own tax advisor for a full understanding of the tax consequences of the Merger to you, including the consequences under any applicable, state, local, foreign or other tax laws or tax treaties.
For a more detailed description of the material Israeli tax consequences of the Merger, see “Material Israeli Tax Consequences.”
Risk Factors Relating to the Combined Company Following the Merger
There is the possibility that Comtech, following the Merger, may be unable to successfully integrate the business of Gilat to realize the anticipated benefits of the Merger or to do so within the intended timeframe. Comtech may overestimate the synergies that will result from the Merger or underestimate the cost of implementing such synergies.
Comtech will be required to devote significant management attention and resources to integrating the businesses and operations of Gilat with Comtech. The anticipated benefits from the Merger are based on projections and assumptions about the combined business of Gilat and Comtech, which may not materialize as expected or which may prove to be inaccurate. Comtech’s ability to achieve the anticipated benefits will depend on its ability to successfully and efficiently integrate the business and operations of Gilat with those of Comtech and achieve the expected synergies. Comtech may encounter significant challenges with successfully integrating and realizing the anticipated benefits of the Merger, including the following:

challenges managing the costs of integration and compliance;

difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from combining the two businesses;
 
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challenges integrating management teams, corporate cultures, management philosophies, strategies, operations, products and services;

experiencing potential disruptions due to diversion of management attention;

uncertainty with retaining key employees, customers, suppliers and other partners of Gilat and Comtech;

challenges in creating and enforcing uniform standards, controls, procedures, policies and information systems;

limitations prior to the completion of the Merger on the ability of management of Gilat and Comtech to conduct planning regarding the integration of the two companies;

challenges integrating complex systems, technology, networks and other assets of Gilat into those of Comtech in a manner that minimizes any adverse impact on customers, suppliers, employees and other constituencies;

managing the increased scale and complexity of Comtech’s operations resulting from the Merger;

incurring potential unknown liabilities and unforeseen increased expenses or delays associated with the Merger, including costs to integrate Gilat; and

experiencing potential disruptions of, or the loss of momentum in, each company’s ongoing businesses.
Many of these factors will be outside of Comtech’s control and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and energy, which could materially impact the business, financial condition and results of operations of the combined company. Even if the operations of Comtech’s and Gilat’s businesses are integrated successfully, there can be no assurance that Comtech will be able to realize some or all of the anticipated benefits of the Merger.
The Merger may not be accretive, and may be dilutive, to the combined company’s earnings per share, which may harm the market price of the Comtech Common Stock following the Merger.
Gilat and Comtech currently believe the Merger will result in a number of benefits, including cost savings, operating efficiencies, and stronger demand for their respective products and services, and that the Merger will be accretive to Comtech’s earnings. This belief is based, in part, on preliminary current estimates that may materially change. Comtech following the Merger could encounter additional transaction and integration-related costs or other factors such as the failure to realize all of the benefits anticipated in the Merger, a downturn in its business, or adverse changes in market conditions. All of these factors could cause dilution to Comtech’s earnings per share following the Merger or decrease or delay the expected accretive effect of the Merger and cause a decrease in the price of shares of Comtech Common Stock following the Merger.
The market price of Comtech Common Stock after the Merger will continue to fluctuate and may be affected by factors different from those affecting the Gilat Shares.
Upon completion of the Merger, holders of Gilat Shares will become holders of Comtech Common Stock. The market price of Comtech Common Stock has declined since the announcement of the Merger and may fluctuate significantly following consummation of the Merger and holders of Gilat Shares could lose the value of their investment in Comtech Common Stock. In addition, the stock market has experienced significant price and volume fluctuations since the Merger due to the spread of COVID-19 and its financial impact on the global economy and could continue to have a material adverse effect on the market for, or liquidity of, the Comtech Common Stock, regardless of Comtech’s actual operating performance. In addition, Comtech’s business differs in important respects from that of Gilat, and accordingly, the results of operations of the combined company and the market price of Comtech Common Stock after the completion of the Merger may be affected by factors different from those currently affecting the independent results of operations of each of Comtech and Gilat. For a discussion of the businesses of Comtech and Gilat and of
 
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some important factors to consider in connection with those businesses, see the documents incorporated by reference into this proxy statement/prospectus and referred to in “Where You Can Find More Information.”
The use of cash and incurrence of significant indebtedness in connection with the financing of the Merger may have an adverse impact on Comtech’s liquidity, limit its flexibility in responding to other business opportunities and increase its vulnerability to adverse economic and industry conditions.
At January 31, 2020, Comtech’s balance of cash and cash equivalents was $46.5 million and as of December 31, 2019, Gilat had approximately $74.8 million of unrestricted cash and cash equivalents. Comtech expects to fund the acquisition of Gilat and related transaction costs through the use of unrestricted cash and cash equivalents on hand at Closing and drawing on a new credit facility. The use of unrestricted cash on hand and indebtedness to finance the Merger will reduce Comtech’s liquidity and could cause Comtech to place more reliance on cash generated from operations to pay principal and interest on its debt, thereby reducing the availability of its cash flow for working capital, dividend and capital expenditure needs or to pursue other potential strategic plans. The increased indebtedness may also have the effect, among other things, of limiting Comtech’s ability to obtain additional financing, if needed, limiting Comtech’s flexibility in the conduct of its business and making it more vulnerable to economic downturns and adverse competitive and industry conditions.
The agreements that will govern the indebtedness to be incurred by Comtech in connection with the Merger will likely contain various covenants that impose restrictions on Comtech that may affect its ability to operate its business.
The agreements that will govern the indebtedness to be incurred by Comtech in connection with the Merger will likely contain various affirmative and negative covenants that, subject to certain significant exceptions, are likely to restrict the ability of Comtech to, among other things, have liens on its property, change the nature of its business, transact business with affiliates or merge or consolidate with any other person or sell or convey certain of its assets to any one person. In addition, some of the agreements that govern the financing may contain financial covenants that may require Comtech to maintain certain financial ratios. The ability of Comtech to comply with these provisions may be affected by events beyond its control. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate Comtech’s repayment obligations.
Following the Merger, Comtech will incur significant transaction and integration related costs in connection with the Merger.
Comtech expects to incur costs associated with integrating the operations of Gilat following the Closing. The amount of these costs could be material to the financial position and results of operations of Comtech following the Merger. A substantial amount of such expenses will be comprised of transaction costs related to the Merger, facilities and systems consolidation costs, and employee-related costs. Comtech will also incur fees and costs related to formulating integration plans and performing integration activities. Additional unanticipated costs may be incurred in the integration of the two companies’ businesses. The elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may not offset incremental transaction and other integration related costs in the near term.
Certain Gilat counterparties may acquire certain rights upon the Merger, which could negatively affect Comtech following the Merger.
Gilat is party to numerous contracts, agreements, licenses, permits, authorizations and other arrangements that contain provisions giving counterparties certain rights (including, in some cases, termination rights) in the event of an “assignment” of the agreement or a “change in control” of Gilat or its subsidiaries. The definitions of  “assignment” and “change in control” vary from contract to contract and, in some cases, the “assignment” or “change in control” provisions may be implicated by the Merger. If an “assignment” or “change in control” occurs, a counterparty may be permitted to terminate its contract with Gilat.
Whether a counterparty would have cancellation rights in connection with the Merger depends upon the language and governing law of its agreement with Gilat. Whether a counterparty exercises any
 
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cancellation rights it has would depend on, among other factors, such counterparty’s views with respect to the financial strength and business reputation of Comtech following the Merger and prevailing market conditions. Gilat cannot presently predict the effects, if any, if the Merger is deemed to constitute a change in control under certain of its contracts and other arrangements, including the extent to which cancellation rights would be exercised, if at all, or the effect on Comtech’s financial condition, results of operations or cash flows following the Merger, but such effect could be material.
Uncertainties associated with the Merger may cause a loss of employees, including senior management and key employees and may otherwise materially adversely affect the future business and operations of Comtech following the Merger.
Comtech’s success following the Merger will depend upon the ability of Comtech to retain senior management and key employees of Comtech and Gilat following the Merger. Many of Comtech and Gilat’s employees are researchers, engineers and other highly skilled professionals. Comtech and Gilat operate in a highly specialized market and having skilled personnel is necessary for ensuring the supply of high quality products and services. There are only a limited number of people in the job market who possess the requisite skills, and it may be difficult for Comtech following the Merger to hire qualified personnel over time. Furthermore, certain options to purchase Gilat Shares held by Gilat employees vest in connection with the Merger, and Comtech following the Merger may need to offer similar awards and benefits to increase retention.
Current and prospective employees of Comtech and Gilat may experience uncertainty about their roles with Comtech following the Merger. In addition, key employees may depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Comtech following the Merger. The loss of services of certain senior management or key employees of Gilat or the inability to hire new personnel with the requisite skills could restrict the ability of Comtech following the Merger to develop new products or enhance existing products in a timely manner, to sell products to customers, to provide competitive services or to manage the business of Comtech effectively. Also, the business, financial condition and results of operations of Comtech following the Merger could be materially adversely affected by the loss of any of its key employees, by the failure of any key employee to perform in his or her current position, or by Comtech’s inability to attract and retain skilled employees.
Following the Merger, Comtech will have a more complex organizational structure, which could result in unfavorable tax or other consequences and could have an adverse effect on its net income and financial condition.
Comtech following the Merger will operate legal entities in many countries around the world where it will conduct manufacturing, development, design and sales operations. In some countries, it will maintain multiple entities for tax or other purposes. Changes in tax laws, regulations, and related interpretations in the countries in which it operates may adversely affect its results of operations. Comtech following the Merger will have many entities globally and may have unsettled intercompany balances between some of these entities that could result, if changes in law, regulations or related interpretations occur, in adverse tax or other consequences affecting its capital structure, intercompany interest rates and legal structure.
Comtech’s results following the Merger may differ materially from the unaudited pro forma condensed combined financial information and from the Gilat Management Projections included in this proxy statement/​prospectus.
Comtech’s results following the Merger may be materially different from those shown in the unaudited pro forma condensed combined financial information presented in this proxy statement/prospectus that shows only a combination of Comtech’s and Gilat’s historical results. Furthermore, no assurances can be made regarding future events or that the assumptions made by Gilat prior to entering into the Merger Agreement when preparing the Gilat Management Projections (as defined in “The Merger — Certain Unaudited Projections of Gilat”) will accurately reflect future conditions or that the projected results set forth in the Gilat Management Projections will be realized, and actual results will likely differ, and may differ materially, from such projections, which could result in a material adverse effect on the business, financial condition, results of operations and prospects of Comtech following the Merger. In particular, following the date the Gilat Management Projections were prepared and Gilat entered into the Merger Agreement, there
 
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has been an outbreak and global spread of the COVID-19 pandemic. As a result, during the first quarter of 2020, Gilat has experienced a significant reduction in its business and expects to record a loss for the first quarter of 2020, and Gilat is unable at this time to estimate the extent of the effect of COVID-19 on its business. The effects of COVID-19 on Gilat’s business were not taken into account by Gilat when preparing the Gilat Management Projections prior to entering into the Merger Agreement and may further impact the likelihood that the projected results set forth in the Gilat Management Projections will be realized. In addition, Comtech expects to incur significant costs associated with completing the Merger and integrating the operations of Gilat, and the exact magnitude of these costs is not yet known. Furthermore, these costs may decrease the amount of capital that could be used by Comtech for other purposes.
The Comtech Common Stock will be traded on different markets and this may result in price variations.
Following the Merger, the shares of Comtech Common Stock will be traded on both the Nasdaq as well as the TASE. Price variations may result due to this dual listing. Trading in the Comtech Common Stock on these markets will also occur at different times (resulting from different time zones, different trading days and different public holidays in the United States and Israel). Given these and other factors, such as differences in exchange rates, the Comtech Common Stock may trade at different prices on the TASE and the Nasdaq. In addition, market influences in one market may influence the price in the other.
Other Risk Factors of Comtech and Gilat
Comtech’s and Gilat’s businesses are, and will continue to be, subject to the risks described above. In addition, Comtech is, and will continue to be, subject to the risks described in Comtech’s Annual Report on Form 10-K for the fiscal year ended July 31, 2019, as may be amended and updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, all of which are filed or furnished with the SEC and incorporated by reference into this proxy statement/prospectus. Gilat is, and will continue to be, subject to the risks described in Gilat’s Annual Report on Form 20-F for the fiscal year ended December 31, 2019, as may be amended and updated by subsequent Reports on Form 6-K, all of which are filed or furnished with the SEC and incorporated by reference into this proxy statement/prospectus. For more information, see “Where You Can Find More Information.”
 
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THE PARTIES TO THE MERGER
Comtech Telecommunications Corp.
Comtech is a leading provider of advanced communications solutions for both commercial and government customers worldwide. Comtech’s solutions fulfill its customers’ needs for secure wireless communications in some of the most demanding environments, including those where traditional communications are unavailable or cost-prohibitive, and in mission-critical scenarios where performance is crucial. In recent years, Comtech has benefited from an increase in market demand for global voice, video and data usage which has resulted in Comtech growing.
Comtech Common Stock is traded on Nasdaq under the symbol “CMTL.”
The principal executive offices of Comtech are located at 68 South Service Road, Suite 230, Melville, NY, 11747, and its telephone number is (631) 962-7000.
Gilat Satellite Networks Ltd.
Gilat is a leading global provider of satellite-based broadband communications. With 30 years of experience, Gilat designs and manufactures cutting-edge ground segment equipment, and provides comprehensive solutions and end-to-end services, powered by Gilat’s innovative technology. Delivering high value competitive solutions, Gilat’s portfolio includes a cloud based VSAT network platform, high-speed modems, high performance on-the-move antennas and high efficiency, high power Solid State Amplifiers (SSPA) and Block Upconverters (BUC).
Gilat’s comprehensive solutions support multiple applications with a full portfolio of products to address key applications including broadband access, cellular backhaul, enterprise, in-flight connectivity, maritime, trains, defense and public safety, all while meeting the most stringent service level requirements.
Gilat Shares are traded on Nasdaq and the TASE under the symbol “GILT.”
The principal executive offices of Gilat are located at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel, and its telephone number is +972-3-925-2000.
Convoy Ltd.
Merger Sub, a wholly-owned subsidiary of Comtech, is a company organized under the laws of the State of Israel that was formed on January 15, 2020 for the sole purpose of effecting the Merger. It is anticipated that the Merger Sub will be wholly owned by a company to be organized under the laws of the State of Israel (“Holdco”) and that Holdco will be wholly owned by an existing subsidiary of Comtech organized under the laws of the United Kingdom (“UK Holdco”). In the Merger, Merger Sub will be merged with and into Gilat, with Gilat surviving as a wholly-owned subsidiary of Comtech.
 
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THE GILAT EXTRAORDINARY GENERAL MEETING
This proxy statement/prospectus is being made available to the Gilat shareholders as part of a solicitation of proxies by the Gilat Board for use at the General Meeting to be held at the time and place specified below, and at any properly convened meeting following any adjournment or postponement thereof. This proxy statement/​prospectus provides Gilat shareholders with the information they need to know to be able to vote or instruct their vote to be cast at the General Meeting.
Time and Place of the General Meeting
This Proxy Statement is being furnished to holders of Gilat Shares in connection with the solicitation of proxies by and on behalf of the Gilat Board for use at the General Meeting to be held on May 8, 2020, at 12:00 p.m. (Israel time), at Gilat’s principal executive offices, at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel, and at any adjournment or postponement thereof.
In light of the recent outbreak of the coronavirus (COVID-19) pandemic, Gilat reserves the option to convert the General Meeting from a physical meeting to a virtual meeting at a later date. In such event, Gilat will issue a press release and furnish a Form 6-K or other document with the SEC prior to the date of the General Meeting outlining the manner in which shareholders may attend the virtual meeting.
Attendance at the General Meeting is limited to holders of record of Gilat Shares and holders of valid proxies. If you plan to attend the General Meeting, to gain access to the General Meeting we ask that you bring with you some form of personal identification and verification of your status as a Gilat shareholder as of the close of trading on April 8, 2020, the record date for the General Meeting. If you are a representative of an institutional investor, please bring evidence demonstrating your representative capacity for such entity to be verified against the list of Gilat shareholders as of the close of trading on the record date for the General Meeting. In addition, if your Gilat Shares are held in the name of a broker, bank or other nominee, you will need a valid legal proxy from such entity evidencing your authority to vote the Gilat Shares that the institution or other nominee held for your account as of the close of trading on the record date for the General Meeting. You must contact your broker, bank or other nominee directly in advance of the General Meeting to obtain a “legal” proxy.
Purposes of the General Meeting; Proposed Resolutions
At the General Meeting, you will be asked to consider and vote on the following:

the approval of  (i) the Merger Agreement; (ii) the Merger; (iii) the Merger Consideration; and (iv) all other transactions contemplated by the Merger Agreement and related to the Merger, as detailed in Gilat’s proxy statement/prospectus for the General Meeting (collectively, the “Merger Proposal”);

the approval to purchase a seven-year “tail” endorsement to Gilat’s current directors’ and officers’ liability insurance policy;

the approval of the payment of a transaction bonus to the Chief Executive Officer of Gilat;

the approval of the payment of a transaction bonus to the Chief Financial Officer of Gilat;

the approval of an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors; and

the reelection of Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board for an additional three-year term or until his prior termination or resignation.
A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus and incorporated herein by reference. The text of the proposed resolution to approve the Merger Proposal and the other matters on the agenda are set out below:
It is proposed that the following resolutions be adopted at the General Meeting:
Proposal 1:   “RESOLVED, to approve (i) the Agreement and Plan of Merger dated as of January 29, 2020 (as it may be amended from time to time, the “Merger Agreement”) by and among Gilat, Comtech Telecommunications Corp., a Delaware corporation (“Comtech”), and Convoy Ltd., a company organized
 
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under the laws of the State of Israel and a wholly-owned subsidiary of Comtech (“Merger Sub”); (ii) the merger of Merger Sub with and into Gilat in accordance with Sections 314-327 of the Israeli Companies Law, 5759-1999 (the “ICL”), following which Merger Sub will cease to exist as a separate legal entity and Gilat will become a wholly-owned subsidiary of Comtech (the “Merger”); (iii) the right to receive (the “Merger Consideration”), a combination of  (A) $7.18 in cash, without interest, plus (B) 0.08425 of a validly issued, fully paid and nonassessable share of the common stock of Comtech, par value $0.10 per share (the “Comtech Common Stock”), with cash payable in lieu of fractional shares of Comtech Common Stock, subject to applicable withholding taxes, for each ordinary share, par value NIS 0.20 per share, of Gilat (the “Gilat Shares”) held by Gilat’s shareholders as of immediately prior to the effective time of the Merger; and (iv) all other transactions contemplated by the Merger Agreement and related to the Merger, as detailed in Gilat’s proxy statement/prospectus for the General Meeting (collectively, the “Merger Proposal”).”
Proposal 2:   RESOLVED, to approve the purchase of a seven-year “tail” endorsement to Gilat’s current directors’ and officers’ liability insurance policy, as described in Proposal 2 of the proxy statement/​prospectus”;
Proposal 3:   RESOLVED, to approve the payment of a transaction bonus to the Chief Executive Officer of Gilat, as described in Proposal 3 of the proxy statement/prospectus”;
Proposal 4:   RESOLVED, to approve the payment of a transaction bonus to the Chief Financial Officer of Gilat, as described in Proposal 4 of the proxy statement/prospectus”;
Proposal 5:   RESOLVED, to approve an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors, as described in Proposal 5 of the proxy statement/prospectus”; and
Proposal 6:   RESOLVED, to reelect Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board, for an additional three-year term or until his prior termination or resignation.”
Gilat cannot complete the Merger unless its shareholders approve the Merger Proposal (Proposal 1). However, the completion of the Merger is not contingent on the approval of Proposals 2, 3, 4, 5 or 6 above.
Recommendation of the Gilat Board
After careful consideration, the Gilat Board has unanimously (i) determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are advisable and fair to and in the best interests of Gilat and its shareholders and that, considering the financial position of the merging companies, and assuming, among other things, the accuracy of the representations and warranties of Comtech and Merger Sub in the Merger Agreement, no reasonable concern exists that the surviving company, as a result of the Merger, will be unable to fulfill the obligations of Gilat to its creditors; (ii) approved the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger; and (iii) resolved to direct that the Merger Agreement be submitted to the shareholders of Gilat for approval and adoption and recommend that the shareholders of Gilat vote in favor of the approval and adoption of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, all upon the terms and subject to the conditions set forth in the Merger Agreement. Accordingly, the Gilat Board unanimously recommends that Gilat shareholders vote “FOR” the Merger Proposal and the other proposals on the agenda for the General Meeting. For a discussion of the factors that the Gilat Board considered in determining to recommend the approval and adoption of the Merger Proposal, see “The Merger — Gilat’s Reasons for the Merger; Recommendation of the Gilat Board.”
Record Date; Shareholders Entitled to Vote
In accordance with the ICL and Gilat’s Articles of Association, the Gilat Board has fixed April 8, 2020 as the record date for determining the shareholders entitled to notice of, and to vote at, the General Meeting. Accordingly, you are entitled to notice of, and to vote at, the General Meeting only if you were a record holder of Gilat Shares at the close of business on that date, irrespective of the amount of Gilat Shares in your
 
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possession on such date. Gilat shareholders who hold Gilat Shares through members of the TASE may participate and vote at the General Meeting if they confirm their ownership as required by the ICL and its regulations.
As of March 30, 2020, there were 55,493,258 Gilat Shares outstanding and entitled to vote. Your shares may be voted at the General Meeting only if you are present or your shares are represented by a valid proxy.
If, as of the Record Date, you held Gilat Shares through a bank, broker or other nominee which is a shareholder of record of Gilat or which appears in the participant list of a securities depository, you are considered to be beneficial owners of shares held in “street name.” This Proxy Statement and other proxy materials are being forwarded to beneficial owners by your bank, broker or other nominee that is considered the holder of record. Beneficial owners have the right to direct how their shares should be voted and are also invited to attend the General Meeting, but may not actually vote their shares in person at the General Meeting. The bank, broker or other nominee that is a shareholder of record has enclosed a voting instruction card for you to use in directing the holder of record how to vote the shares.
You may receive more than one set of voting materials, including multiple copies of this document and multiple proxy cards or voting instruction cards. For example, shareholders who hold shares in more than one brokerage account will receive a separate voting instruction card for each brokerage account in which shares are held.
Gilat shareholders of record whose shares are registered in more than one name will receive more than one proxy card. You should complete, sign, date and return each proxy card and voting instruction card you receive.
Quorum
A quorum must be present in order for the General Meeting to be held. Pursuant to Gilat’s Articles of Association, the quorum required for the General Meeting consists of at least two shareholders present, in person or by proxy, who hold or represent between them more than 25% of Gilat’s issued and outstanding share capital. Broker non-votes and abstentions will be counted as present at the General Meeting for the purpose of determining whether a quorum is present. A broker non-vote occurs when a bank, broker or other nominee holding Gilat Shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions from the beneficial owner. While counted for quorum purposes, abstentions and broker non-votes will not be treated as voting shares and will not have any effect on whether the requisite vote is obtained for all matters placed before shareholders for their vote. None of the proposals at the General Meeting allow for discretionary voting by banks, brokers or other nominees. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting shall be adjourned to May 15, 2020, at the same time and place. At such adjourned meeting, the presence of at least two shareholders in person or by proxy (regardless of the voting power possessed by their shares) will constitute a quorum.
Vote Required
The approval of the Merger Proposal will require the affirmative vote of holders of a majority of the Gilat Shares present, in person or by proxy, and voting on the Merger Proposal (not taking into consideration abstentions), excluding any Gilat Shares that are held by Merger Sub, Comtech or by any person or entity holding at least 25% of the “means of control” (within the meaning of the ICL) of either Merger Sub or Comtech, or any person or entity acting on behalf of either Merger Sub or Comtech or any person or entity described in the previous clause, including any of their affiliates. Under the Merger Agreement, Comtech has represented that it does not own directly or indirectly any Gilat Shares and based on the public filings of Comtech and its stockholders, as of the Record Date, no stockholder of Comtech holds 25% or more of the common stock of Comtech or any other kind of means of control of Comtech.
The approval of each of Proposals 2, 3, 4, 5 and 6 requires the affirmative vote of a majority of the Gilat Shares present, in person or by proxy, and voting on such proposal (not taking into consideration abstentions). In addition, in order to approve each of Proposals 2, 3, 4, 5 and 6, the shareholders’ approval
 
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must either (i) include at least a majority of the Gilat Shares voted by shareholders who are not controlling shareholders (within the meaning of the ICL) and who are not shareholders who have a personal interest (within the meaning of the ICL) in the approval of such proposal (excluding, in the case of Proposal 6, a personal interest that is not related to a relationship with the controlling shareholders), not taking into consideration abstentions, or (ii) be obtained such that the total Gilat Shares of non-controlling shareholders and non-interested shareholders voted against such proposal do not represent more than two percent of the outstanding Gilat Shares.
Under the ICL, in general, a person will be deemed to be a “controlling shareholder” if the person has the power to direct the activities of Gilat, other than solely as a result of serving as a director or officer of Gilat. A person is presumed to be a controlling shareholder if it holds (i) 50% or more of any type of control means in Gilat, or (ii) 25% or more of the voting rights in Gilat, if no other person holds more than 50% of the voting rights in Gilat.
Under the ICL, a person is deemed to have a “personal interest” in the proposal if this person, or certain members of this person’s family or a company that is affiliated with this person or with such members of this person’s family (namely, a company in which this person or any such family member serves as a director or chief executive officer, has the right to appoint a director or the chief executive officer, or owns 5% or more of the outstanding shares) has a personal interest in the adoption of such proposal. However, a person is not deemed to have a “personal interest” if this person’s interest arises solely from this person’s ownership of Gilat Shares. The term “personal interest” also includes a personal interest of an individual voting via a power of attorney given by a third party (even if the empowering shareholder has no personal interest), and the vote of an attorney-in-fact shall be considered a personal interest vote if the empowering shareholder has a personal interest, in each case regardless of whether the attorney-in-fact has the discretion in the voting.
The enclosed form of proxy card requires you to certify that you are not a controlling shareholder of Gilat, do not have a personal interest in (A) Proposal 2 (the purchase of the “tail” endorsement to the D&O liability insurance policy); (B) Proposal 3 (the payment of a transaction bonus to the Chief Executive Officer of Gilat); (C) Proposal 4 (the payment of a transaction bonuses to the Chief Financial Officer of Gilat); (D) Proposal 5 (the approval of an amendment to the executive bonus payment schedule set forth in Gilat’s Compensation Policy for Executive Officers and Directors); and (E) Proposal 6 (the reelection Elyezer Shkedy to serve as an External Director (within the meaning of the ICL) on the Gilat Board, and, with respect to Proposal 1, are not a shareholder listed in Section 320(c) of the ICL (i.e., you are neither Merger Sub nor do you own directly or indirectly through Comtech, 25% or more of the ordinary shares or other kind of means of control of Merger Sub). To make this certification with respect to Proposals 1 through 6, check the box “YES” in Items 1A, 2A, 3A, 4A, 5A and 6A, respectively, in the enclosed proxy card.
Each Gilat Share is entitled to one vote on each proposal or item that comes before the General Meeting. If two or more persons are registered as joint owners of any Gilat Share, the right to attend the General Meeting shall be conferred upon all of the joint owners, but the right to vote at the General Meeting and/or the right to be counted as part of the quorum required for the General Meeting shall be conferred exclusively upon the senior among the joint owners attending the General Meeting, in person or by proxy, and for this purpose seniority shall be determined by the order in which the names stand on Gilat’s Shareholder Register.
Only Gilat Shares that are voted will be counted towards determining whether the Merger Proposal or the other applicable agenda matter is approved by shareholders. Gilat Shares present at the General Meeting that are not voted on a particular proposal or Gilat Shares present by proxy where the shareholder properly withheld authority to vote on such proposal (including broker non-votes) will not be counted in determining whether such matter is approved by shareholders, but will be counted for purposes of determining whether a quorum exists.
A proxy card of a record shareholder that is signed and returned that does not indicate a vote “FOR” or “AGAINST” a proposal, the shares subject to such proxy card will not be voted at the General Meeting on such proposal but will be counted for purposes of determining whether a quorum exists.
A bank, broker or nominee who holds shares for customers who are the beneficial owners of those shares has the authority to vote on “routine” proposals when it has not received instructions from the
 
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beneficial owners. However, such bank, broker or nominee is prohibited from giving a proxy to vote those customers’ shares with respect to approving non-routine matters, such as the Merger Proposal to be voted on at the General Meeting, without instructions from the customer. Gilat Shares held by a bank, broker or nominee that are not voted at the General Meeting because the customer has not provided instructions to the bank, broker or nominee will not be considered to be votes “FOR” or “AGAINST” the Merger Proposal or any other proposal and will have no effect on the result of the vote.
Voting Procedures; Revoking Proxies or Voting Instructions
Shareholders of Record
If you are a shareholder of record, meaning that your Gilat Shares and your share certificate(s) were registered in your name with us and Gilat’s transfer agent as of the Record Date, you may vote (a) in person by attending the General Meeting or (b) by marking, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.
If you sign, date and return your proxy card without indicating how you want to vote, your Gilat Shares will not be voted at the General Meeting but will be counted for purposes of determining whether a quorum exists.
Shares Held in “Street Name”
If you hold your Gilat Shares in “street name” through a bank, broker or other nominee you should follow the instructions on the form you receive from your bank, broker or other nominee. If your Gilat Shares are held in “street name” and you wish to vote such shares by attending the General Meeting in person, you will need to obtain a proxy from your bank, broker or other nominee. If your Gilat Shares are held in “street name,” you must contact your bank, broker or other nominee to change or revoke your voting instructions.
Shares Traded on TASE
Shareholders who hold Gilat Shares through members of the TASE may vote in person or vote through the enclosed form of proxy by completing, signing, dating and mailing the proxy with a copy of their identity card, passport or certificate of incorporation, as the case may be, to Gilat’s offices. Shareholders who hold shares through members of the TASE and intend to vote their shares either in person or by proxy must deliver to Gilat an ownership certificate confirming their ownership of Gilat Shares on the Record Date, which must be certified by a recognized financial institution, as required by the Israeli Companies Regulations (Proof of Ownership of Shares for Voting at General Meeting) of 2000, as amended.
Alternatively, shareholders who hold shares through members of the TASE may vote electronically via the electronic voting system of the Israel Securities Authority up to six hours before the time fixed for the General Meeting. You should receive instructions about electronic voting from the TASE member through which you hold your shares.
Voting of Proxies
All Gilat Shares represented at the General Meeting by valid proxies that we receive in time for the General Meeting as a result of this solicitation (other than proxies that are revoked or superseded before they are voted) will be voted in the manner specified on such proxy. If you submit an executed proxy but do not specify how to vote your proxy, your Gilat Shares will not be voted at the General Meeting.
Proxies submitted with instructions to abstain from voting and broker non-votes will not be considered to be votes “FOR” or “AGAINST” the Merger Proposal or any other proposal and will have no effect on the result of the vote.
Revocation of Proxies
You may revoke your proxy at any time before the vote is taken at the General Meeting by (a) delivering to Gilat at its principal executive offices located at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat
 
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Arye, Petah Tikva 4913020, Israel, Attention: Chief Financial Officer, a written notice of revocation, bearing a later date than the proxy, stating that the proxy is revoked, (b) by properly submitting a later-dated proxy relating to the same Gilat Shares or (c) by attending the General Meeting and voting in person (although attendance at the General Meeting will not, by itself, revoke a proxy). Gilat Shares represented by properly executed proxies received by us no later than four (4) hours prior to the General Meeting will, unless such proxies have been previously revoked or superseded, be voted at the General Meeting in accordance with the directions on the proxies. Written notices of revocation and other communications concerning the revocation of a previously executed proxy should be addressed to us at Gilat’s principal executive offices located at Gilat House, 21 Yegia Kapayim Street, Daniv Park, Kiryat Arye, Petah Tikva 4913020, Israel, Attention: Chief Financial Officer.
You may also be represented by another person present at the General Meeting by executing a proxy designating such person to act on your behalf.
No Appraisal Rights; Objections by Creditors
Under Israeli law, holders of Gilat Shares are not entitled to appraisal rights in connection with the Merger. Under the ICL, objections to the Merger may be filed by Gilat creditors with the Israeli district court. The court, in its discretion, may provide a remedy to any creditor who so objects if there is a reasonable concern that, as a result of the Merger, Gilat will not be able to satisfy its obligations to its creditors following completion of the Merger.
Solicitation of Proxies
Gilat will bear the costs of solicitation of proxies for the General Meeting. In addition to solicitation by mail, Gilat’s directors, officers and employees may solicit proxies from shareholders by telephone, email, personal interview or otherwise. Gilat’s directors, officers and employees will not receive additional compensation for such solicitation, but may be reimbursed for out-of-pocket expenses in connection with such solicitation. Brokers, nominees, fiduciaries and other custodians have been requested to forward soliciting material to the beneficial owners of Gilat Shares held of record by them, and such custodians will be reimbursed for their reasonable expenses. Gilat may reimburse the reasonable charges and expenses of brokerage houses or other nominees or fiduciaries for forwarding proxy materials to, and obtaining authority to execute proxies from, beneficial owners for whose accounts they hold Gilat Shares.
As a foreign private issuer, Gilat is exempt from the rules under the Securities Exchange Act of 1934, as amended, related to the furnishing and content of proxy statements. The circulation of this notice and proxy statement/prospectus should not be taken as an admission that Gilat is subject to such rules.
SHAREHOLDERS SHOULD NOT SEND ANY CERTIFICATES REPRESENTING GILAT SHARES WITH THEIR PROXY CARDS. IF THE MERGER PROPOSAL IS APPROVED AND THE MERGER IS SUBSEQUENTLY COMPLETED, YOU WILL RECEIVE INSTRUCTIONS FOR SURRENDERING YOUR CERTIFICATES IN EXCHANGE FOR THE MERGER CONSIDERATION.
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED. IN ORDER TO AVOID UNNECESSARY EXPENSE, GILAT ASKS YOUR COOPERATION IN RETURNING YOUR PROXY CARD PROMPTLY, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
Adjournments and Postponements
If within half an hour from the time appointed for the holding of the General Meeting a quorum is not present, the General Meeting will stand adjourned until one week thereafter, May 15, 2020, at the same time and place. If within half an hour from the time appointed for holding of the adjourned meeting the aforesaid percentage of Gilat Shares required for a quorum is not present, two or more shareholders (regardless of the percentage of Gilat Shares held by them) who are present will constitute a quorum for the business for which the original meeting was called.
 
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Gilat Shares Held by Gilat Directors and Executive Officers
As of March 30, 2020, Gilat’s directors and executive officers beneficially owned, in the aggregate, 2,145,728 Gilat Shares, or collectively approximately 3.8% of the outstanding Gilat Shares. For more information, see “Security Ownership of Certain Beneficial Owners and Management of Gilat.” Gilat’s directors and executive officers have interests in the Merger that may be different from, or in addition to, the interests of the Gilat shareholders generally. For more information, please see “The Merger — Interests of the Gilat Directors and Executive Officers in the Merger.
Additional Information
If you have questions about the Merger or how to submit your proxy, or if you need any additional copies of this Proxy Statement or the enclosed proxy card or voting instructions, please contact                 .
 
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PROPOSAL 1
APPROVAL AND ADOPTION OF THE MERGER PROPOSAL
As discussed elsewhere in this proxy statement/prospectus, Gilat shareholders will consider and vote on the Merger Proposal, which consists of a proposal for Gilat shareholders to approve and adopt (i) the Merger Agreement; (ii) the Merger on the terms and subject to the conditions set forth in the Merger Agreement and in accordance with the provisions of Sections 314-327 of the ICL, following which Merger Sub will cease to exist, and Gilat will become a wholly-owned subsidiary of Comtech; (iii) the Merger Consideration; and (iv) all other transactions contemplated by the Merger Agreement, all upon the terms and subject to the conditions set forth in the Merger Agreement.
You are urged to carefully read this proxy statement/prospectus in its entirety for more detailed information concerning the Merger and the Merger Agreement, including the information set forth in “The Merger” and “The Merger Agreement.” A copy of the Merger Agreement is attached as Annex A to this proxy statement/prospectus and incorporated by reference herein. You are urged to read the Merger Agreement carefully and in its entirety.
It is proposed that at the General Meeting the following resolution is adopted to approve the Merger Proposal:
RESOLVED, to approve (i) the Agreement and Plan of Merger dated as of January 29, 2020 (as it may be amended from time to time, the “Merger Agreement”) by and among Gilat, Comtech Telecommunications Corp., a Delaware corporation (“Comtech”), and Convoy Ltd., a company organized under the laws of the State of Israel and a wholly-owned subsidiary of Comtech (“Merger Sub”); (ii) the merger of Merger Sub with and into Gilat in accordance with Sections 314-327 of the Israeli Companies Law, 5759-1999 (the “ICL”), following which Merger Sub will cease to exist as a separate legal entity and Gilat will become a wholly-owned subsidiary of Comtech (the “Merger”); (iii) the right to receive (the “Merger Consideration”), a combination of  (A) $7.18 in cash, without interest, plus (B) 0.08425 of a validly issued, fully paid and nonassessable share of the common stock of Comtech, par value $0.10 per share (the “Comtech Common Stock”), with cash payable in lieu of fractional shares of Comtech Common Stock, subject to applicable withholding taxes, for each ordinary share, par value NIS 0.20 per share, of Gilat (the “Gilat Shares”) held by Gilat’s shareholders as of immediately prior to the effective time of the Merger; and (iv) all other transactions contemplated by the Merger Agreement and related to the Merger, as detailed in Gilat’s proxy statement/prospectus for the General Meeting (collectively, the “Merger Proposal”).”
The Gilat Board unanimously recommends a vote “FOR” the Merger Proposal and the above resolution by the Gilat shareholders.
 
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THE MERGER
The following is a discussion of the Merger and the material terms of the Merger Agreement between Comtech and Gilat. You are urged to read the Merger Agreement carefully and in its entirety, a copy of which is attached as Annex A to this proxy statement/prospectus and incorporated by reference herein.
Effects of the Merger
On the terms and subject to the conditions of the Merger Agreement, and in accordance with the ICL, at the Effective Time, Merger Sub will be merged with and into Gilat. As a result of the Merger, (a) the separate corporate existence of Merger Sub will cease and Gilat will continue as the Surviving Company; (b) all the properties, rights, privileges, powers and franchises of Gilat and Merger Sub will vest in Gilat (as the Surviving Company); (c) all debts, liabilities and duties of Gilat and Merger Sub shall become the debts, liabilities and duties of Gilat (as the Surviving Company); and (d) all the rights, privileges, immunities, powers and franchises of Gilat (as the Surviving Company) will continue unaffected by the Merger in accordance with the ICL.
At the Effective Time, each Gilat Share issued and outstanding immediately prior to the consummation of the Merger (except for Gilat Shares held in the treasury of Gilat, held by Comtech or any direct or indirect wholly-owned subsidiary of Gilat or Comtech) will be converted into the right to receive, without interest and less any applicable withholding taxes, (a) $7.18 in cash (the “Cash Merger Consideration”), and (b) 0.08425 of a share of Comtech common stock, par value $0.10 per share (the “Stock Merger Consideration,” and, together with the Cash Merger Consideration, the “Merger Consideration”) in each case, upon the terms and subject to the conditions and restrictions set forth in the Merger Agreement.
In lieu of any fractional share of Comtech Common Stock that otherwise would be issuable pursuant to the Merger, each holder of Gilat Shares who otherwise would be entitled to receive a fraction of a share of Comtech Common Stock pursuant to the Merger will be paid an amount in cash (without interest) equal to (i) the fraction of a share of Comtech Common Stock to which such holder would otherwise be entitled, multiplied by (ii) the Parent Average Trading Price.
Each Gilat Share issued and outstanding immediately prior to the Effective Time (other than shares to be cancelled in accordance with the paragraph below), will automatically be converted into and represent the right to receive the Merger Consideration, without interest and less applicable taxes required to be withheld, in each case in such manner as provided in the Merger Agreement. No certificate or scrip representing fractional shares of Comtech Common Stock will be issued upon the surrender for exchange of certificates or with respect to book-entry shares, and such fractional share interests will not entitle the owner thereof to vote or to any other rights of a shareholder of Comtech.
Each Gilat Share held in the treasury of Gilat (dormant shares) or on behalf of Gilat, if any, or held by Comtech or any direct or indirect wholly-owned subsidiary of Gilat or of Comtech, in each case, immediately prior to the Effective Time, if any, will no longer be outstanding and will automatically be cancelled and retired and will cease to exist, and no payment will be made with respect thereto.
Also, at the Effective Time, each ordinary share, nominal value NIS 0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time will be automatically converted into one validly issued, fully paid and nonassessable ordinary share, nominal value NIS 0.20 per share, of the Surviving Company, and such ordinary shares will constitute the only outstanding share capital of the Surviving Company.
Background of the Merger
Over the past several years, Gilat has focused on developing strategies to increase its market share, enter new market segments and enhance its product portfolio. The Gilat Board and senior management periodically reviewed Gilat’s long-term strategic goals and related plans, and considered and evaluated potential options for enhancing shareholder value as a stand-alone company and alternatives for strategic transactions to enhance shareholder value.
 
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During these discussions, senior management and Board members considered the challenges of continuing on the path as an independent public company and operating in a highly competitive and consolidating industry. Moreover, during the past couple of years several multinational corporations, including Amazon, Apple and SpaceX, have publicly stated their desire and have taken steps to enter the market of satellite communications. Throughout such period, from time to time, Gilat has received indications of interest, mostly through intermediaries, that did not progress beyond an initial discussion.
The following chronology sets forth a summary of the material events leading up to the execution of the Merger Agreement.
In June 2018, Gilat management asked Amiram Boehm, a member of the Gilat Board, to assist Gilat by facilitating introductions to two European aviation companies as part of a potential collaboration regarding low Earth orbit (LEO) satellite constellations. As these companies began to work with Gilat, and became familiar with Gilat’s capabilities, one of the companies (“Company A”) requested a meeting with the Chairman of the Gilat Board, Dov Baharav, and representatives of Gilat’s controlling shareholders regarding a possible investment in Gilat. In connection with the meeting, Gilat explored, on an informal basis with the assistance of Jefferies (which had knowledge of Gilat’s industry and with which Gilat had an ongoing relationship), whether there might be additional third-party interest in Gilat. Approximately 30 parties, both strategic investors and financial sponsors (which group of parties did not include Comtech), were contacted by Jefferies on behalf of Gilat on a no-name and unsolicited basis. Gilat also requested the assistance of another investment banking firm to contact third parties on a no-name and unsolicited basis in Japan, India and Australia. For various reasons stated by certain of these third parties, among them, Gilat’s exposure to certain markets, business involving a mix of commercial and defense-end markets and niche industry, Gilat concluded that interest from these third parties was not sufficient to warrant an active shopping process with attendant risks to Gilat, including the impact on Gilat’s customers, suppliers and employees.
In January 2019, a member of the Gilat Board met with representatives of Company A, but Company A subsequently informed Gilat that, for unspecified internal reasons, it elected not to proceed further.
In early May 2019, Mr. Boehm, a Gilat Board member who is also a partner in the FIMI Opportunity Funds, whose funds comprise Gilat’s largest shareholder, was approached by Mr. Stanley Stern of Bradley Woods & Co. (“BW”), with whom he had a prior business relationship. In a discussion regarding a number of FIMI portfolio companies, including Gilat, Mr. Stern noted that he believed Comtech, among other companies, might have an interest in exploring a strategic relationship with Gilat. In late May 2019, Mr. Stern discussed the matter with Michael Porcelain, President and Chief Operating Officer of Comtech, and Mr. Porcelain indicated that a relationship between Gilat and Comtech may be of interest to Comtech, and that he would raise the opportunity internally. After a series of calls and discussions between Mr. Stern and Mr. Porcelain throughout June 2019, Mr. Porcelain orally indicated an interest to Mr. Stern in further exploring the opportunity.
Subsequently, in mid-July 2019, a teleconference was held between Mr. Boehm and Mr. Porcelain in which they discussed the opportunities in the market and possibilities for collaboration, and exchanged information about their respective companies that was otherwise publicly available. In the course of the call, Mr. Porcelain indicated that Comtech may have interest in acquiring Gilat. Messrs. Porcelain and Boehm agreed that as a next step Comtech should submit a non-binding proposal to the Gilat Board for its consideration and evaluation.
On August 9, 2019, Comtech delivered a letter to the Gilat Board setting forth a non-binding proposal to acquire 100% of the outstanding Gilat Shares for a purchase price ranging from $9.34 to $9.76 per Gilat Share, with approximately 70% of the purchase price payable in cash and the remaining 30% payable in shares of Comtech Common Stock. The letter indicated, among other things, that the non-binding proposal was subject to completion of due diligence and negotiation of a definitive agreement. The proposed purchase price represented a premium of approximately 10% to 15% based on the 30-day volume weighted average price of Gilat Shares of approximately $8.49 on August 8, 2019.
Comtech also indicated in its proposal that it had engaged Goldman, Sachs & Co. (“Goldman Sachs”) to act as its financial advisor, Proskauer Rose LLP (“Proskauer”) and Goldfarb Seligman & Co. (“Goldfarb
 
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Seligman”) to act as its U.S. and Israeli legal counsel, respectively, and Duff  & Phelps, PricewaterhouseCoopers LLP and Deloitte & Touche LLP (“Deloitte”) to assist in its accounting and financial due diligence. Comtech’s non-binding proposal indicated that, assuming Comtech was provided with exclusive access, it was confident that it could be in a position to complete its due diligence review and execute a definitive agreement within a 90-day period.
On August 15, 2019, the Gilat Board met, together with Gilat’s Chief Executive Officer and Chief Financial Officer and a representative from Naschitz, Brandes, Amir & Co., Gilat’s Israeli legal counsel (“NBA & Co.”), to review Comtech’s non-binding proposal. The Gilat Board members reviewed and discussed the terms of the proposal, and appointed a transaction committee of the Gilat Board (the “Committee”), consisting of Dov Baharav (Chairman) and directors Dafna Sharir and Ishay Davidi, to interact with Comtech, explore transaction possibilities, evaluate the need to engage a financial advisor and present its recommendations for next steps to the Gilat Board. At the meeting, a representative of NBA & Co. outlined legal matters relevant to the Gilat Board’s process and decision-making with respect to the evaluation of Comtech’s non-binding proposal and various related fiduciary duty matters under Israeli law.
Later that day, the Committee met to discuss Gilat’s response to Comtech and proposed to set an in-person meeting in New York between the Committee members and Comtech to present Gilat’s response and expectations regarding the process surrounding a potential transaction.
Thereafter, members of the Committee, with the assistance of Mr. Stern, corresponded with Mr. Porcelain and with representatives of Goldman Sachs to coordinate a meeting between the parties in New York in early September 2019.
On September 1, 2019, members of the Committee and Mr. Boehm met in Israel and, on September 3, 2019, the Committee, Mr. Boehm and Mr. Stern met again in New York, to prepare for the meeting with Comtech and Goldman Sachs. In advance of the meeting, NBA & Co. and Proskauer negotiated a mutual Non-Disclosure Agreement, which was executed by Gilat and Comtech on September 3, 2019.
On September 3, 2019, members of the Committee, Mr. Boehm and Mr. Stern of BW met with Fred Kornberg, Comtech’s Chairman and Chief Executive Officer, Mr. Porcelain, Edwin Kantor, a Comtech director, and representatives of Goldman Sachs in New York, at which meeting the parties discussed Comtech’s proposal and the potential transaction, as well as Comtech’s request for an exclusive due diligence and negotiation period to further evaluate the proposed transaction and potentially submit an enhanced proposal.
On September 4, 2019, members of the Committee met with Jefferies and another investment banking firm in New York to consider the engagement of a financial advisor, in addition to BW, to assist the Gilat Board in evaluating, and to render an opinion to the Gilat Board regarding, the consideration to be provided in a transaction should a transaction materialize.
On September 5, 2019, following the meetings in New York between the parties, Comtech delivered a draft Exclusivity Agreement, which thereafter was negotiated between NBA & Co. and Proskauer.
On September 9, 2019, the Gilat Board reviewed the recommendations of the Committee and considered Comtech’s request for exclusivity. Following discussion, and in light of, among other things, the absence of any indication of interest from any other party at that time, the Gilat Board approved granting Comtech a limited exclusivity period through October 28, 2019, in which to pursue its due diligence review and submit an enhanced proposal. The Gilat Board further approved the establishment of a steering committee (the “Steering Committee”), consisting of directors Mr. Baharav (Chairman), Ms. Sharir and Mr. Boehm, and Gilat’s Chief Executive Officer, Chief Financial Officer and General Counsel, to assist the Gilat Board and the Committee in managing and implementing the due diligence review process.
On September 12, 2019, Gilat and Comtech executed the Exclusivity Agreement restricting Gilat from soliciting, negotiating or entering into a strategic transaction with another party prior to 5:00 p.m. (New York time) on October 28, 2019, by which time, Comtech had indicated, it expected to have substantially
 
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completed its due diligence review and be in a position to submit an enhanced proposal. Thereafter, Comtech and its advisors submitted to Gilat initial due diligence requests regarding matters not available in Gilat’s public filings.
Beginning on September 12, 2019, Gilat, with the assistance of NBA & Co., responded to due diligence requests from Comtech and its advisors, and uploaded documentation regarding Gilat to a virtual data room.
From September 18, 2019 until the execution of the Merger Agreement, the Steering Committee met on a weekly and on an as-needed basis to discuss various matters relating to the due diligence review process.
On September 24, 2019, following the approval of the Gilat Board, Gilat provided access to its virtual data room to Comtech and its advisors, while continuing to receive and respond to additional due diligence requests from Comtech. From such time and until the execution of the Merger Agreement, Comtech and its advisors conducted business, financial, accounting, tax, commercial, labor and legal due diligence on Gilat, and held meetings and discussions with members of Gilat’s management and its representatives and advisors, NBA & Co., Carter Ledyard Milburn LLP, Gilat’s U.S. legal counsel (“CLM”), Gilat’s counsel in Peru and Brazil, and BW.
On September 27, 2019, Proskauer sent to NBA & Co. a draft Clean Team Agreement to address the review of sensitive commercial material of Gilat. Comtech and Gilat, with the assistance of Proskauer and NBA & Co., negotiated and exchanged drafts of the agreement and, on October 23, 2019, Gilat and Comtech executed the Clean Team Agreement, which limited access to certain Gilat information to specified advisors to Comtech.
Beginning on October 16, 2019, Gilat submitted to Comtech due diligence requests regarding matters not available in Comtech’s public filings. Gilat also engaged Quilty Analytics to perform industry, operational and business due diligence on Comtech on Gilat’s behalf.
On October 28, 2019, the Gilat Board met to discuss and approve Comtech’s request to extend the exclusive due diligence and negotiations period until November 18, 2019 to enable Comtech to substantially complete its due diligence review and submit an enhanced proposal. Thereafter, Gilat’s Chief Executive Officer advised Mr. Porcelain that Gilat would agree to extend the exclusive due diligence and negotiations period until November 18, 2019 provided Comtech submits an enhanced proposal by November 11, 2019.
On October 29, 2019, Comtech provided access to its virtual data room to Gilat and its representatives and advisors, while continuing to respond to additional requests from Gilat. From such time and until the execution of the Merger Agreement, Gilat and its representatives and advisors conducted business, financial, accounting, tax, commercial, labor and legal due diligence of Comtech, and held meetings with members of Comtech’s management and Comtech’s advisors and representatives. Also throughout such period, representatives of Gilat, NBA & Co., CLM, Quilty Analytics, BW, Comtech, Goldman Sachs, Proskauer and Goldfarb Seligman held various discussions on financial, regulatory and other due diligence matters.
On November 12, 2019, a representative of Bank B (who had approached Mr. Boehm in the past but was refused because of the exclusive due diligence and negotiations period that existed at the time) contacted Mr. Boehm and proposed that representatives of Gilat meet with a potential financial buyer (“Party B”), which indicated its interest in evaluating a potential transaction with Gilat, following a meeting with the Chief Financial Officer of Gilat on November 11, 2019 as part of regularly scheduled investor meetings.
On November 14, 2019, Gilat’s Chief Financial Officer visited Comtech’s offices in Melville, New York and held discussions with Mr. Porcelain and other members of Comtech senior management, on financial, accounting and tax due diligence matters.
On November 18, 2019, Mr. Kornberg contacted Mr. Baharav to notify him that Comtech would require a few additional weeks to complete its diligence review and to submit a revised proposal. Mr. Kornberg indicated that Comtech expected the revised proposal to reflect a higher share price range than the proposed price range included in its previous proposal submitted in August 2019.
Also, on November 18, 2019, the Gilat Board met to review and approve Gilat’s financial results for the third quarter ended September 30, 2019 and, on November 19, 2019, Gilat issued a press release to report such financial results.
 
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On November 19, 2019, Party B signed a confidentiality agreement with Gilat and thereafter Gilat provided representatives of Party B access to limited overview diligence material concerning Gilat. On November 27, 2019, the Chief Executive Officer and the Chief Financial Officer of Gilat met with representatives of Party B in New York, but Party B elected not to continue to evaluate a potential transaction.
On December 6, 2019, Comtech delivered a letter to the Gilat Board with a revised non-binding proposal to acquire 100% of the outstanding Gilat Shares for a purchase price of  $10.00 per Gilat Share, with 70% of the purchase price payable in cash and the remaining 30% payable in Comtech Common Stock. Comtech noted that its advisors had prepared initial drafts of transaction agreements and, assuming Gilat confirmed its agreement to proceed by December 13, 2019 on the basis of Comtech’s revised proposal and extended the exclusivity period through January 31, 2020, Comtech would be in a position to negotiate and enter into a definitive agreement by January 31, 2020. Comtech’s proposed purchase price represented a premium of approximately 24% based on the 30-day volume weighted average price of the Gilat Shares of approximately $8.09 on December 5, 2019.
On December 9, 2019, the Gilat Board met, together with Gilat’s Chief Executive Officer, Chief Financial Officer and General Counsel and Mr. Stern and NBA & Co., to review Comtech’s revised non-binding proposal. At the meeting, the Board discussed various aspects of the proposed transaction and approved an extension to the exclusivity period granted to Comtech until January 31, 2020 on the basis that, as both parties would work to complete their respective due diligence reviews and negotiated and finalized definitive agreements, Comtech would continue to evaluate its proposed purchase price, including the mix of cash and stock.
On December 15, 2019, the Committee met and discussed Gilat’s course of action and the expected timeline for the transaction. Following the meeting, Mr. Baharav advised Mr. Kornberg that the Gilat Board had approved an extension to the exclusivity period to finalize due diligence and definitive agreements by January 31, 2020 on the basis that Comtech would continue to evaluate its proposed purchase price, including the mix of cash and stock.
On December 16, 2019, Proskauer, on behalf of Comtech, delivered to Gilat and NBA & Co. initial drafts of the Merger Agreement and the Voting Agreement.
On December 18, 2019 and December 23, 2019, the Committee, Gilat’s Chief Financial Officer and General Counsel and NBA & Co. met to discuss the initial drafts of the Merger Agreement and the Voting Agreement submitted by Comtech, as well as the proposed purchase price and allocation of the purchase price between cash and shares of Comtech Common Stock. Mr. Stern also attended the meeting on December 23, 2019.
On December 29, 2019, the Gilat Board met, together with Gilat’s Chief Executive Officer, Chief Financial Officer and General Counsel and NBA & Co., to review the drafts of the Merger Agreement and Voting Agreement and to discuss the engagement of Jefferies as an additional financial advisor to assist the Gilat Board in evaluating, and to deliver an opinion to the Gilat Board regarding, the consideration to be provided in a transaction if one were to proceed. The Gilat Board authorized the Committee to negotiate the terms of Jefferies’ engagement as discussed in the meeting, and Jefferies subsequently was engaged as an additional financial advisor for such purposes.
On December 31, 2019, the Committee, Gilat’s Chief Financial Officer and General Counsel and NBA & Co. met to discuss the drafts of the Merger Agreement and Voting Agreement. Later that day, a teleconference was held between Mr. Boehm and Mr. Porcelain to discuss the transaction status and a timeline for reaching definitive agreements.
On January 2, 2020, NBA & Co. circulated, on behalf of Gilat, to Proskauer and Goldfarb Seligman, comments to the drafts of the Merger Agreement and Voting Agreement.
On January 6, 2020, Proskauer circulated a list of discussion points in advance of a scheduled teleconference between the parties. On January 7, 2020, NBA & Co., Proskauer and Goldfarb Seligman held a teleconference at which the discussion points were discussed.
 
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From January 6, 2020 through January 8, 2020, a representative of Gilat’s finance team visited Comtech’s offices in Melville, New York and held discussions with Mr. Porcelain and Mr. Bondi of Comtech, representatives of Deloitte and representatives of Goldman Sachs on various financial, accounting and tax matters. Gilat’s representatives and advisors also attended these sessions and additional sessions at Comtech’s offices from January 7, 2020 to January 9, 2020.
On January 9, 2020, Mr. Boehm and Mr. Porcelain spoke by phone regarding Gilat’s and Comtech’s respective purchase price perspectives, the transaction status and the timeline for reaching definitive agreements. On the call, Mr. Porcelain noted that Comtech was continuing to evaluate financing and structuring alternatives but that at such time Comtech was not in a position to increase the proposed purchase price above $10.00 per Gilat Share.
On January 13, 2020, Proskauer circulated, on behalf of Comtech, to NBA & Co. revised drafts of the Merger Agreement and Voting Agreement in advance of an in-person negotiation session that was scheduled for January 16, 2020.
On January 14, 2020, Mr. Baharav and Mr. Kornberg spoke by phone regarding the proposed purchase price and certain other outstanding items. Mr. Kornberg advised Mr. Baharav that Comtech would not increase its proposed purchase price above $10.00 per Gilat Share. Following the call, the Committee held a teleconference at which it was decided that Mr. Boehm would meet Mr. Porcelain in New York in an attempt to find a solution to increase Comtech’s proposed purchase price per Gilat Share.
On January 15, 2020, Mr. Boehm and Gilat’s Chief Financial Officer visited Comtech’s offices in Melville, New York. At the meeting, Mr. Boehm and Mr. Porcelain met separately and discussed certain outstanding matters relating to the contemplated transaction, including the proposed purchase price and the allocation of such purchase price between the cash and stock components of the consideration, and Gilat’s Chief Financial Officer held various discussions with Comtech’s Chief Financial Officer and other Comtech executives on financial, accounting and tax matters.
Also on January 15, 2020, NBA & Co. circulated, on behalf of Gilat, to Proskauer and Goldfarb Seligman an initial draft of Gilat’s disclosure schedules to the Merger Agreement.
On January 16, 2020, Proskauer, Goldfarb Seligman, NBA & Co. and Gilat’s Chief Financial Officer and General Counsel met at the offices of Proskauer in New York City to review the revised drafts of the Merger Agreement and Voting Agreement.
Also on January 16, 2020, Mr. Baharav met with Mr. Kornberg and Mr. Porcelain at Comtech’s offices in Melville, New York and discussed certain outstanding items, including the proposed purchase price and the approach to valuing Comtech Common Stock for purposes of the stock component of the purchase price.
At approximately 2:00 p.m. (Israel time), on January 19, 2020, market rumors relating to a possible acquisition of Gilat were published in the financial press in Israel. On the next Nasdaq trading day (January 21, 2020) following the publication of the market rumors, the share price of the Gilat Shares on Nasdaq increased by approximately 12.5% to $10.29 per share.
Following the publication, a special meeting of the Gilat Board was called on the evening of January 19, 2020 to discuss the publication and the status of the transaction. The Gilat Board, at the advice of CLM and NBA & Co., confirmed its practice of not responding to market rumors, and directed management to reiterate and re-emphasize to all Gilat employees, advisors and representatives aware of the potential transaction that all information relating to the potential transaction (including its existence) was considered material non-public information, was to remain strictly confidential and not to be disclosed, including to others within Gilat, and that any person aware of the potential transaction was prohibited from trading in the securities of Gilat and Comtech. The parties agreed to proceed expeditiously to finalize the negotiations and remaining open points.
Between January 20, 2020 and January 29, 2020, Gilat, with the assistance of NBA & Co., CLM and BW, and Comtech, with the assistance of Proskauer, Goldfarb Seligman and Goldman Sachs, continued extensive negotiations with respect to the Merger Agreement, the Voting Agreement and other ancillary documentation, particularly with respect to the proposed purchase price, the allocation of such purchase price
 
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between the cash and stock components and the approach to valuing Comtech Common Stock issuable as the stock component of the purchase price.
During the negotiations, all members of the Gilat Board and senior management were regularly updated and consulted on the negotiations and remaining unresolved points.
During these negotiations, Gilat requested, and Comtech agreed, to increase the proposed purchase price to $10.25 per Gilat Share, of which 70% would be payable in cash ($7.18) with the remaining 30% payable in the form of 0.08425 of a share of Comtech Common Stock, calculated based on a stock price for Comtech Common Stock of  $36.50 per share. Further requests by Gilat in the course of the negotiations to increase Comtech’s proposed purchase price above $10.25 per Gilat Share, to increase the cash component and to base the calculation of the stock component on a stock price for Comtech Common Stock of less than $36.50 per share were rejected by Comtech. During this period, NBA & Co., CLM, Proskauer and Goldfarb Seligman continued to negotiate the terms of the Merger Agreement and Voting Agreement.
On January 23, 2020, the Gilat Board held a meeting at the offices of NBA & Co. in Tel Aviv, Israel, at which members of Gilat’s senior management and Gilat’s advisors were present, including representatives of NBA & Co., Quilty Analytics, BW and Jefferies. At the meeting, a representative of NBA & Co. discussed the key terms of the drafts of the Merger Agreement and Voting Agreement, including closing conditions and termination provisions. The Gilat Board further discussed the termination fee that would be payable upon certain termination events and the remaining open points. A representative of NBA & Co. further reviewed with the Gilat Board its fiduciary duties under Israeli law in connection with a potential sale of Gilat and related Israeli law matters. The Gilat Board was also updated on the commercial, financial, accounting and tax due diligence review performed on Comtech in connection with the transaction, including the meetings held in Melville, New York with Comtech management. Also at the meeting, Jefferies reviewed with the Gilat Board Jefferies’ preliminary financial analysis of Gilat and Comtech.
Also on January 23, 2020, the Comtech Board held a meeting, at which members of Comtech’s senior management and representatives of Proskauer and Goldman Sachs were present. At the meeting, representatives of Goldman Sachs presented an overview of the proposed transaction and its financial terms, a representative of Proskauer summarized certain key terms and open points in the Merger Agreement and Voting Agreement, and Mr. Porcelain provided an update on the status of the financing.
On January 27, 2020 and January 28, 2020, the Gilat Board held meetings, at which members of Gilat’s senior management and representatives of NBA & Co. and BW were present. Representatives of Jefferies also attended the meeting on January 27, 2020. During the meetings, the Gilat Board was updated on the status of the negotiations.
During the evening on January 28, 2020, the Comtech Board held a meeting, at which members of Comtech’s senior management and representatives of Proskauer and Goldman Sachs were present, to update the Comtech Board on the status of negotiations with Gilat regarding the Merger Agreement and to consider the approval of the proposed Merger Agreement. At the meeting, a representative of Proskauer summarized the key terms of the Merger Agreement and Voting Agreement for the Comtech Board, and representatives of Goldman Sachs gave an overview of the proposed transaction and discussed its financial terms. Following extensive discussions and deliberations, the Comtech Board unanimously approved the Merger Agreement and the Voting Agreement, as well as the financing commitment letter and the transactions contemplated thereby, including the Merger. In light of the closing stock price of Comtech Common Stock of  $37.10 per share on January 28, 2020, the proposed consideration payable in the Merger reflected an implied value of  $10.31 per Gilat Share as of such date.
In the early morning of January 29, 2020 (New York time), Comtech delivered to Gilat a copy of the draft financing commitment letter it received from a group of lenders led by Citi. Also on January 29, 2020, the Gilat Board held a meeting attended by Gilat’s senior management and representatives of NBA & Co., Jefferies and BW. The purpose of the meeting was to consider the final terms of the proposed Merger transaction with Comtech and to approve the Merger Agreement and related transactions. A representative of NBA & Co. discussed the key terms of the Merger Agreement and the Voting Agreement and highlighted the material changes since the Gilat Board’s previous discussions at its meetings on January 23, 2020, January 27, 2020 and January 28, 2020. Also at this meeting, Jefferies reviewed its financial analysis of the
 
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Merger Consideration with the Gilat Board and rendered an oral opinion, confirmed by delivery of a written opinion dated January 29, 2020, to the Gilat Board to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in the opinion, the Merger Consideration to be received by holders of Gilat Shares (other than, as applicable, Comtech, Merger Sub and their respective affiliates) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders. Following a discussion of the factors relevant to the transaction during the course of the Gilat Board meeting, all members of the Gilat Board unanimously (i) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement were advisable and fair to, and in the best interests of, Gilat and its shareholders and that, considering the financial position of the merging companies, no reasonable concern exists that the surviving company will be unable to fulfill the obligations of Gilat to its creditors; (ii) approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement; and (iii) determined to recommend that the shareholders of Gilat approve the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, all upon the terms and subject to the conditions set forth in the Merger Agreement.
Later in the morning on January 29, 2020, Comtech delivered its executed financing commitment letter to Gilat and Gilat, Merger Sub and Comtech entered into the Merger Agreement. At approximately 7:00 a.m. (New York time) on January 29, 2020, Comtech and Gilat issued a joint press release announcing the transaction and the execution of the Merger Agreement.
Gilat’s Reasons for the Merger; Recommendation of the Gilat Board
At its meeting on January 29, 2020, the Gilat Board evaluated the terms of the Merger Proposal, including the terms and conditions of the Merger Agreement, and unanimously (i) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable and fair to, and in the best interests of, Gilat and its shareholders, (ii) approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, (iii) determined that no reasonable concern exists that Gilat, as the surviving company in the Merger, will be unable to fulfill its obligations to its creditors as a result of the Merger, (iv) directed Gilat’s management to call a General Meeting of shareholders and to take such other actions as are necessary to complete the Merger and (v) resolved to recommend that the Gilat shareholders approve the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement and directed that such matters be submitted for consideration of the Gilat shareholders at the General Meeting.
In evaluating the Merger Agreement, including the Merger and the other transactions contemplated by the Merger Agreement, the Gilat Board consulted with Gilat’s management and legal, financial and other outside professional advisors and considered various information and factors in connection with the Merger, including the material factors described below. Among the information and material factors considered by the Gilat Board were the following (which are not listed in any relative order of importance):
Financial Condition; Prospects of Gilat

Current and historical market prices for Gilat Shares and the fact that the Merger Consideration represents a premium compared with the trading prices of Gilat Shares.

Gilat’s current and historical financial condition, results of operations, competitive position, strategic options and prospects, as well as the financial plan and prospects if Gilat were to remain an independent public company, and the potential impact of those factors on the trading price of Gilat Shares.

The significant elements of Gilat’s business and operating strategy that will benefit from partnership with Comtech.

The combined companies will:

have an enhanced ability to compete in the rapidly changing global satellite connectivity market and enable Gilat to better take advantage of increased available opportunities in the competitive marketplace;
 
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have the ability to address the complete range of commercial and defense customer needs for advanced satellite communications technologies, by addressing all market segments, from high-volume, cost-sensitive applications to price-insensitive premium customer use cases;

offer end-to-end solutions for key high-growth markets, including mobility (IFC, maritime) cellular backhaul, LEO/MEO deployment, enterprise and military Satcom; and

have improved financial scale with benefits in supply chain and purchasing, in addition to customary corporate and public company cost savings.

The Merger offers an opportunity to accelerate Gilat’s growth, by providing complementary businesses and significant resources, which is expected to enhance competitiveness and provide a larger share of opportunities that the dynamic satellite market offers.

Comtech’s broad global reach together with Gilat’s established customer installed base offers a vastly expanded opportunity for selling a full range of current and future combined company solutions.

Gilat will be able to take advantage of Comtech’s strong presence in the United States and access to the U.S. Army, Marines and Navy.

The prospective risks to Gilat as a stand-alone public entity, including the risks and uncertainties with respect to:

the competition Gilat faces from its competitors and potential competitors that are much larger than Gilat;

the ongoing consolidation in Gilat’s industries;

the importance of scale in a competitive market environment and the associated challenges to growth as a smaller stand-alone public entity;

the recent indications and steps adopted by several mega companies, including Amazon, Apple and SpaceX, to enter the market of satellite communications;

the drastic increase in the competitiveness in this environment that is expected due to the R&D capabilities and financial positioning of such entering mega companies;

Gilat’s dependency on a very limited number of key customers; and

other “Risk Factors” as set forth in Gilat’s Annual Report on Form 20-F for the fiscal year ended December 31, 2018.

In light of the financial position of Gilat and Merger Sub, no reasonable concern exists that as a result of the Merger the surviving company will not be able to fulfill the obligations of Gilat to its creditors.
Strategic Alternatives

The trends and competitive developments in Gilat’s industries and the range of strategic alternatives available to Gilat. These strategic alternatives included remaining a stand-alone company, being acquired by or pursuing a business combination with other companies.

Based on the process undertaken by Gilat, with the assistance of its financial advisors, (i) the Gilat Board believed it was well-informed about the opportunities for acquisition and business combination transactions and how potential acquirers and strategic partners would likely value Gilat’s business in the context of an acquisition or business combination, and took this knowledge and experience into account in considering potential strategic alternatives available to Gilat, and (ii) Bradley Woods advised the Gilat Board that they did not know of any other buyer at that time that would pay more than the consideration offered in the contemplated transaction by Comtech.

The fact that the Merger Consideration was more favorable to Gilat’s shareholders than the potential value that might result from other alternatives reasonably available to Gilat, including, but not limited to, acquisitions, dividends and the continued operation of Gilat on a stand-alone basis in light of a number of factors, including the risks and uncertainties associated with those alternatives.
 
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Financial Terms; Financial Advisor Opinion; Certainty of Value

Historical market prices, volatility and trading information with respect to Gilat Shares, including that the implied per share Merger Consideration of  $10.31 per share (based on the cash consideration of  $7.18 per share and, for the stock consideration, the exchange ratio of 0.08425 of a share of Comtech Common Stock for each outstanding Gilat Share and the closing price of Comtech Common Stock on January 28, 2020 of  $37.10 per share):

represented a premium of 12.6% over the closing price of the Gilat Shares on Nasdaq on January 17, 2020 (the last trading day prior to the publication of market rumors relating to a possible acquisition of Gilat); and

represented a premium of 21.4%, 26.2% and 22.3% over the 30 trading days, three months and one year, respectively, volume-weighted average closing prices of the Gilat Shares on Nasdaq prior to January 17, 2020.

The Gilat Board’s belief that the Merger Consideration represents the highest consideration that Comtech was willing to pay and the highest per share value reasonably obtainable for Gilat’s shareholders, in each case, as of the date of the Merger Agreement, with the Gilat Board basing this belief on Gilat’s negotiations with Comtech and a number of factors, including the fact that this price represented an increase from the $9.34 per Gilat Share to $9.76 per Gilat Share price range initially offered by Comtech, Gilat’s understanding of Comtech’s available and potential cash resources and Comtech’s inability to issue more than 20% of its outstanding common stock without stockholder approval.

The financial presentation and opinion, dated January 29, 2020, of Jefferies to the Gilat Board as to the fairness, from a financial point of view and as of such date, of the Merger Consideration to be received by holders of Gilat Shares (other than, as applicable, Comtech, Merger Sub and their respective affiliates) pursuant to the Merger Agreement, which opinion was based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as further described under the heading “— Opinion of Jefferies LLC.

The form of consideration to be paid in the Merger is approximately 70% in cash and the remainder in Nasdaq-listed Comtech Common Stock, which provides significantly better certainty of value and immediate liquidity to Gilat’s shareholders, especially when viewed against the risks and uncertainties inherent in Gilat’s business.

The Gilat Board considered that the portion of the Merger Consideration to be paid in the Merger in shares of Comtech Common Stock provides Gilat’s shareholders with the opportunity to participate in any increase in value of Comtech or of the combined company following the Effective Time.
Fiduciary Out

Subject to compliance with the Merger Agreement, the Gilat Board is permitted to participate in discussions or negotiations with, or provide non-public information to, any person in response to a bona fide unsolicited acquisition proposal for Gilat by such person, if the Gilat Board determines, based on the advice of its outside legal counsel, that such acquisition proposal constitutes or may constitute a superior proposal, and that the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties.

Gilat is permitted to terminate the Merger Agreement upon the failure of Gilat’s shareholders to approve the Merger Proposal, subject to compliance with the Merger Agreement, including, in specified cases, the payment of a termination fee of approximately $21,675,000 (or approximately 3.75% of the transaction value) upon the consummation of an alternative transaction, which amount the Gilat Board, based in part on advice from its legal advisors and its financial advisor Bradley Woods, believed is reasonable in light of, among other matters, the benefits of the Merger to Gilat’s shareholders, the typical size of such termination fees in similar transactions and the likelihood that a fee of such size would not be a meaningful deterrent to alternative acquisition proposals, as more fully described under “The Merger Agreement — Termination Fee.”
 
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Gilat Board’s belief, based in part on advice from its legal advisors and its financial advisor Bradley Woods, that such termination fee is reasonable, customary and would not deter any interested third party from making, or inhibit the Gilat Board from approving, an acquisition proposal that would constitute a superior proposal if such proposal were available and made in accordance with the terms and conditions of the Merger Agreement.

The ability of the Gilat Board, under certain circumstances, to withhold or withdraw its recommendation that Gilat’s shareholders vote to approve the Merger.

The Gilat Board considered that the Merger will result in detailed public disclosure and a substantial period prior to the convening of the General Meeting to consider the approval and adoption of the Merger Proposal during which a competing proposal could be brought forth.
Likelihood of Consummation

The Merger Agreement reflects terms, including the parties’ respective representations, warranties and covenants, the conditions to their respective obligations to complete the Merger and the ability of the respective parties to terminate the Merger Agreement, that were the product of arm’s-length negotiations.

The structure of the Merger as a statutory merger under the ICL which enables Gilat’s shareholders to receive the Merger Consideration in a relatively short time frame (and reduces the pendency and hence the uncertainty of the Merger).

The approval of the stockholders of Comtech is not required for the consummation of the Merger.

There are no third party (other than certain regulatory) consents that are conditions to the Merger.

There are no financing conditions or related contingencies, and the debt financing commitment received by Comtech in connection with the Merger reduces the possibility that Comtech will be unable to pay the Merger Consideration.

The identity of Comtech, which is a reputable strategic buyer, and Gilat Board’s assessment that Comtech would have adequate capital resources to pay the Merger Consideration.
Other Terms

The structure of the Merger as a statutory merger under the ICL, which allows for an informed vote by Gilat’s shareholders on the merits of the Merger Proposal.

The fact that approval of the Merger Proposal will require the affirmative vote of holders of at least a majority of the Gilat Shares present and voting on the Merger Proposal.

The fact that the Gilat Board had engaged legal and financial advisors with significant experience in public company transactions to assist it in connection with the Merger, and that Gilat’s legal advisors and its financial advisor Bradley Woods were involved throughout the negotiations with Comtech and updated the Gilat Board and the Committee directly and regularly, which provided the Gilat Board with additional perspectives on the negotiations in addition to those of Gilat’s management.

The fact that the members of the Gilat Board were unanimous in their determination to approve the Merger Agreement and the Merger.
Risks and Uncertainties
The Gilat Board also considered a number of uncertainties and risks in its deliberations concerning the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement, including the following (which are not listed in any relative order of importance):

Gilat’s current shareholders would have only a limited opportunity to participate in any possible growth and profits of Gilat following the completion of the Merger (through the Comtech Common Stock included in the Merger Consideration).
 
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The regulatory notifications and approvals required for completion of the Merger and the risk that the applicable governmental authorities may challenge or decide not to approve the Merger. The Gilat Board also considered the potential length of the regulatory approval process.

The risk that the proposed Merger might not be completed, even if approved by Gilat’s shareholders, and the effect of the resulting public announcement of termination of the Merger Agreement on:

The market price of Gilat Shares, which could be affected by many factors, including (i) the reason for the termination of the Merger Agreement and whether such termination results from factors adversely affecting Gilat, (ii) the possibility that the marketplace would consider Gilat to be an unattractive acquisition candidate and (iii) the possible sale of Gilat Shares by short-term investors following the announcement of termination of the Merger Agreement.

Gilat’s operating results, particularly in light of the expenses incurred in connection with the Merger, including the potential requirement to pay a termination fee to Comtech.

Erosion of employee confidence in Gilat and the ability to maintain, attract and retain key personnel.

The reduction in the perceived value of Gilat.

Erosion in relationships with customers, suppliers and others that do business with Gilat.

The possible disruption to Gilat’s business that may result from the announcement of the Merger and the resulting distraction of the attention of Gilat’s management and employees and the impact of the Merger on Gilat’s customers, suppliers and others that do business with Gilat.

The terms of the Merger Agreement, including (i) the operational restrictions imposed on Gilat between signing and closing (which may delay or prevent Gilat from undertaking business opportunities that may arise pending the completion of the Merger) and (ii) the termination fee that could become payable by Gilat under certain circumstances.

The restriction on soliciting competing offers and the risk that some provisions of the Merger Agreement and related documents, including the termination fee that may be payable by Gilat, might have the effect of discouraging other persons potentially interested in acquiring Gilat from pursuing an acquisition of Gilat.

The fact that the cash portion of the Merger Consideration would be taxable to Gilat’s shareholders and the stock portion of the Merger Consideration would be taxable to certain of Gilat’s shareholders. See “Material U.S. Federal Income Tax Consequences of the Merger” and “Material Israeli Tax Consequences of the Merger.”

The risks described in “Risk Factors.”
The Gilat Board also considered that certain of Gilat’s directors and officers may have interests in connection with the Merger that may be different from or in addition to the interests of the Gilat shareholders in general. See “The Merger — Interests of Gilat Directors and Executive Officers in the Merger Proposal.”
After taking into account all of the factors set forth above, as well as others, the Gilat Board unanimously agreed that, overall, the potential benefits of the Merger to Gilat and its shareholders far outweigh the risks and uncertainties.
The foregoing discussion of the factors considered by the Gilat Board is not intended to be exhaustive, but rather includes the material factors considered by the Gilat Board. In view of the wide variety of factors considered by the Gilat Board in connection with its evaluation of the Merger and the complexity of these matters, the Gilat Board did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative or specific weights or values to any of the factors it considered in reaching its decision and did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of the Gilat Board. Rather, the Gilat Board considered all of these factors as a whole and made its recommendation based on the totality of the information available to the Gilat Board, including discussions with, and questioning of, Gilat’s management and discussions with Gilat’s legal and financial advisors. In considering the factors discussed
 
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above, individual members of the Gilat Board may have given different weights to different factors and the factors are not presented in any order of priority.
The Gilat Board realized that there can be no assurance about future results, including results considered or expected as described in the factors listed above. This explanation of Gilat Board’s reasoning and all other information presented in this section are forward-looking in nature and, therefore, should be read in light of the factors discussed under the heading “Special Note Regarding Forward-Looking Statements.”
The Gilat Board unanimously recommends that you vote “FOR” the Merger Proposal.
Comtech’s Reasons for the Merger
The Comtech Board unanimously approved the Merger Agreement and the transactions contemplated thereby, including the Merger. In evaluating the Merger, the Comtech Board consulted with Comtech’s management and its legal and financial advisors, and considered a number of substantive factors including, among other things, the following positive factors:

the belief that the Merger will drive Comtech’s global market access by creating a world leader in the satellite industry with combined annual pro-forma sales approaching nearly $1 billion;

the expectation that the Merger, excluding amortization of acquired intangibles, will be cash accretive to Comtech during the first twelve months after the closing of the Merger and may provide for additional opportunities for sales growth and further efficiencies during the second year after the closing;

the belief that the Merger will strengthen Comtech’s position as a leading supplier of advanced communication solutions, well positioned to service the expanding need for ground infrastructure to support both existing and emerging satellite networks;

the belief that the Merger will broaden Comtech’s leadership position in the rapidly growing in-flight connectivity and cellular backhaul markets which are expected to expand given the availability of lower-cost bandwidth and the adoption of satellite technologies into the 5G cellular backhaul ecosystem;

the expectation that Comtech’s product portfolio will expand given the highly complementary nature of Gilat’s technologies, including Gilat’s high-performance TDMA-based satellite modems and its next generation solid-state amplifiers;

the expectation that the Merger will increase Comtech’s ability to accelerate stockholder value creation by contributing to Comtech’s ongoing strategy to move toward higher margin solutions and by increasing customer diversification both geographically and by market;

the belief that the Merger will offer increased liquidity for existing and new Comtech stockholders, as Comtech plans to pursue a dual listing on Nasdaq and TASE to become effective upon the Closing;

the expectation that the Merger will bolster Comtech’s world-class research and development capabilities, enabling Comtech to offer customers more complete end-to-end technology solutions; and

the commitment of both parties to complete the Merger pursuant to their respective obligations under the terms of the Merger Agreement, and the likelihood that the Gilat shareholder approval needed to complete the Merger will be obtained in a timely manner, which is supported in part by the voting agreements entered into by certain of Gilat’s shareholders, including Gilat’s directors and executive officers who beneficially own Gilat Shares, to vote in favor of the Merger and the transactions contemplated by the Merger Agreement.
In the course of reaching its decision to approve the Merger Agreement and the transactions contemplated thereby, the Comtech Board considered the following additional factors as generally supporting its decision:

the per share Merger Consideration, the fact that the stock portion of the per share Merger Consideration is fixed and the resulting percentage ownership interest that current Gilat shareholders would have in Comtech following the Merger;
 
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the terms and conditions of the Merger Agreement, including the conditions to the completion of the Merger, the circumstances under which the Merger Agreement could be terminated and the impact of such a termination, and the potential payment by Gilat in certain circumstances of a termination fee of  $21,675,000 to Comtech;

historical information concerning Comtech’s and Gilat’s respective businesses, financial condition, results of operations, earnings, management and prospects on a stand-alone basis and forecasted combined basis;

current financial market conditions;

the availability of financing for the cash portion of the purchase price, including a financing commitment for a senior secured credit facility in an aggregate principal amount of  $800 million;

the results of the due diligence review of Gilat’s businesses and operations;

the financial analyses and presentations of Comtech’s financial advisors; and

the likelihood that the Merger would be completed in light of, among other things, the conditions to the Merger and the efforts required to obtain regulatory approvals.
The Comtech Board also identified and considered certain potentially negative factors in its deliberations to be balanced against the positive factors, including:

the risk that, because the stock consideration under the Merger Agreement would not be adjusted for changes in the market price of Comtech Common Stock, the value of the per share Merger Consideration to be paid to Gilat shareholders upon the consummation of the Merger could be significantly more than the value of the per share Merger Consideration immediately prior to the announcement of the Merger;

the adverse impact that business uncertainty pending the closing of the Merger could have on Comtech’s ability to attract, retain and motivate key personnel until the closing of the Merger and thereafter;

the risk that the anticipated benefits of the Merger will not be realized in full or in part, including the risks that expected synergies will not be achieved or not achieved within the expected timeframe;

the risk that while Comtech performed due diligence on Gilat and its business, the scope of that due diligence was limited and there may be aspects of Gilat or its business of which Comtech is not aware;

the fact that Comtech has incurred and will continue to incur significant transaction costs and expenses in connection with the proposed transaction, regardless of whether the Merger is completed;

the difficulties and management challenges inherent in completing the Merger and integrating the businesses, operations, workforce and culture of Gilat with those of Comtech;

the risk that the incremental debt to be incurred in connection with the financing of the Merger will reduce Comtech’s financial flexibility;

execution risk, including the risk of diverting the management of Comtech’s focus and resources from other strategic opportunities and from operational matters while working to implement the Merger, and other potential disruption associated with combining the companies, and the potential effects of such diversion and disruption on the businesses and customer relationships of Comtech and Gilat;

the risk that the Merger may not be consummated despite the parties’ efforts or that the closing of the transactions may be unduly delayed; and

the risks associated with the Merger, the combined company following the Merger, Comtech’s business and Gilat’s business described in “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors.”
After consideration of these factors, the Comtech Board determined that, overall, the potential benefits of the Merger outweighed the potential risks. In view of the wide variety of factors considered in connection
 
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with its evaluation of the Merger and the complexity of these matters, the Comtech Board did not find it useful, and did not attempt, to quantify, rank or otherwise assign any relative or specific weights to the factors that it considered in reaching its determination to approve the Merger Agreement and the transactions contemplated thereby, including the Merger. In addition, individual members of the Comtech Board may have given differing weights to different factors. The Comtech Board conducted an overall analysis of the factors described above, including through discussions with, and inquiry of, Comtech’s management and outside legal and financial advisors regarding certain of the matters described above. It should be noted that this explanation of the reasoning of the Comtech Board and certain information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed in “Cautionary Statement Regarding Forward-Looking Statements.”
Financing of the Merger
Comtech expects to fund the acquisition of Gilat and related transaction costs through the use of unrestricted cash and cash equivalents on hand at Closing and drawing on a new credit facility. In connection with the execution of the Merger Agreement, Comtech obtained a debt commitment letter from Citibank, N.A., Manufacturers and Traders Trust Company, Santander Bank, N.A., BMO Harris Bank, N.A. and BMO Capital Markets Corp., Regions Bank, Israel Discount Bank of New York and Goldman Sachs Bank USA (collectively, the “Commitment Parties”), pursuant to which, among other things, the Commitment Parties have committed to provide Comtech with a senior secured credit facility in an aggregate principal amount of  $800,000,000 to finance, in part, the acquisition of Gilat. Comtech expects to finalize the terms of the new credit facility closer to Closing.
Opinion of Jefferies LLC
Gilat retained Jefferies to provide certain financial advisory services to the Gilat Board in connection with the Merger. In connection with this engagement, the Gilat Board requested that Jefferies evaluate the fairness, from a financial point of view, of the Merger Consideration to be received by holders of Gilat Shares (other than, as applicable, Comtech, Merger Sub and their respective affiliates) pursuant to the Merger Agreement. At a meeting of the Gilat Board held on January 29, 2020 to evaluate the Merger, Jefferies rendered an oral opinion, confirmed by delivery of a written opinion dated January 29, 2020, to the Gilat Board to the effect that, as of that date and based on and subject to various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken as described in its opinion, the Merger Consideration to be received by holders of Gilat Shares (other than, as applicable, Comtech, Merger Sub and their respective affiliates) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.
The full text of Jefferies’ opinion, which describes various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Jefferies, is attached as Annex B to this proxy statement/prospectus statement and is incorporated herein by reference. Jefferies’ opinion was provided for the use and benefit of the Gilat Board (in its capacity as such) in its evaluation of the Merger Consideration from a financial point of view and did not address any other aspect of the Merger or any other matter. Jefferies’ opinion did not address the relative merits of the Merger or other transactions contemplated by the Merger Agreement as compared to any alternative transaction or opportunity that might be available to Gilat, nor did it address the underlying business decision by Gilat to engage in the Merger. Jefferies’ opinion did not constitute a recommendation as to how the Gilat Board, and does not constitute a recommendation as to how any securityholder, should vote or act with respect to the Merger or any other matter. The following summary is qualified in its entirety by reference to the full text of Jefferies’ opinion.
In arriving at its opinion, Jefferies, among other things:

reviewed an execution version, provided to Jefferies on January 29, 2020, of the Merger Agreement;

reviewed certain publicly available financial and other information regarding Gilat and Comtech;

reviewed certain information furnished by the respective managements of Gilat and Comtech relating to the businesses, operations and prospects of Gilat and Comtech, including (a) certain financial forecasts and estimates relating to Gilat provided to or discussed with Jefferies by the management of Gilat under a “base case” and an “upside case” and discussed with the management
 
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of Gilat its assessments as to the relative likelihood of achieving the future financial results reflected in such cases, and (b) certain financial forecasts and estimates relating to Comtech provided to or discussed with Jefferies by the management of Comtech;

held discussions with members of the senior managements of Gilat and Comtech regarding the businesses, operations and prospects of Gilat and Comtech and the other matters described in the second and third bullets immediately above;

reviewed the share trading price history and implied trading multiples for Gilat and Comtech and compared them with those of certain publicly traded companies that Jefferies deemed relevant in evaluating Gilat and Comtech;

compared the financial terms of the Merger with publicly available financial terms of certain other transactions that Jefferies deemed relevant in evaluating the Merger; and

conducted such other financial studies, analyses and investigations as Jefferies deemed appropriate.
In its review and analysis and in rendering its opinion, Jefferies assumed and relied upon, but did not assume any responsibility to independently investigate or verify, the accuracy and completeness of all financial and other information that was supplied or otherwise made available by Gilat and Comtech or that was publicly available to Jefferies (including, without limitation, the information described above) or otherwise reviewed by Jefferies. Jefferies relied on assurances of the managements and other representatives of Gilat and Comtech that they were not aware of any facts or circumstances that would make such information incomplete, inaccurate or misleading. In its review, Jefferies did not make or obtain an independent evaluation or appraisal of any of the assets or liabilities (contingent, accrued, derivative, off-balance sheet or otherwise), nor did Jefferies conduct a physical inspection of any of the properties or facilities, of Gilat, Comtech or any other entity and Jefferies assumed no responsibility to obtain or conduct any such evaluations, appraisals or physical inspections. Jefferies’ analyses and opinion also did not consider any actual or potential arbitration, litigation, claims or possible unasserted claims, investigations or other proceedings to which Gilat, Comtech or any of their respective affiliates are or in the future may be a party or subject.
With respect to the financial forecasts and estimates provided to and reviewed by Jefferies, Jefferies noted that projecting future results of any company is inherently subject to uncertainty. However, Jefferies was advised, and Jefferies assumed, that the financial forecasts and estimates relating to Gilat that Jefferies was directed to utilize for purposes of its analyses and opinion were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Gilat as to, and were an appropriate basis upon which to evaluate, the future financial performance of Gilat and the other matters covered thereby under the alternative cases reflected therein. Jefferies also was advised, and Jefferies assumed, that the financial forecasts and estimates relating to Comtech that Jefferies was directed to utilize for purposes of its analyses and opinion were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Comtech as to, and were an appropriate basis upon which to evaluate, the future financial performance of Comtech and the other matters covered thereby. Jefferies expressed no opinion as to any financial forecasts or estimates or the assumptions on which they were based.
Jefferies relied upon the assessments of the management of Gilat as to, among other things, (i) the potential impact on Gilat and Comtech of market, competitive, macroeconomic, geopolitical and other conditions, trends and developments in and prospects for, and governmental, regulatory and legislative matters relating to or affecting, the communications technology and services industries and the geographic regions in which Gilat and Comtech operate, (ii) Gilat’s and Comtech’s existing and future technology, intellectual property, licenses and products, including the validity and associated risks thereof and the timing and successful development of, and use for, such technology and products, (iii) Gilat’s and Comtech’s existing and future agreements and other arrangements involving, and ability to attract, retain and/or replace, key employees, customers, suppliers and other commercial relationships, and (iv) the ability of Comtech to integrate the businesses of Gilat and Comtech. Jefferies assumed that there would not be any developments with respect to any such matters that would have an adverse effect on Gilat, Comtech or the Merger or that otherwise would be meaningful in any respect to Jefferies’ analyses or opinion.
 
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Jefferies’ opinion was based on economic, monetary, regulatory, market and other conditions existing, and which could be evaluated, as of the date of Jefferies’ opinion. Jefferies expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting its opinion of which Jefferies becomes aware after the date of its opinion. As the Gilat Board was aware, the credit, financial and stock markets, the industries in which Gilat and Comtech operate and the securities of Gilat and Comtech have experienced and may continue to experience volatility and Jefferies expressed no view or opinion as to any potential effects of such volatility on Gilat, Comtech or the Merger.
Jefferies made no independent investigation of, and Jefferies expressed no view or opinion as to, any legal, regulatory, accounting or tax matters affecting or relating to Gilat, Comtech or the Merger and Jefferies assumed the correctness in all respects meaningful to its analyses and opinion of all legal, regulatory, accounting and tax advice given to Gilat and/or the Gilat Board, including, without limitation, with respect to changes in, or the impact of, accounting standards or tax and other laws, regulations and governmental and legislative policies affecting Gilat, Comtech or the Merger and legal, regulatory, accounting and tax consequences to Gilat, Comtech or their respective securityholders of the terms of, and transactions contemplated by, the Merger Agreement and related documents. Jefferies assumed that the Merger would be consummated in accordance with its terms without waiver, modification or amendment of any material term, condition or agreement and in compliance with all applicable laws, documents and other requirements and that, in the course of obtaining the necessary governmental, regulatory or third-party approvals, consents, waivers and releases for the Merger, including with respect to any divestitures or other requirements, no delay, limitation, restriction or condition would be imposed or occur that would have an adverse effect on Gilat, Comtech or the Merger or that otherwise would be meaningful in any respect to Jefferies’ analyses or opinion. Jefferies also assumed that the final Merger Agreement, when signed by the parties thereto, would not differ from the execution version reviewed by Jefferies in any respect meaningful to Jefferies’ analyses or opinion.
In connection with its engagement, Jefferies was not requested to, and Jefferies did not, participate in the negotiation or structuring of the Merger, nor was Jefferies requested to, and Jefferies did not, solicit third-party indications of interest in the acquisition of all or a part of Gilat or any alternative transaction. Jefferies’ opinion did not address the relative merits of the Merger or other transactions contemplated by the Merger Agreement as compared to any alternative transaction or opportunity that might be available to Gilat, nor did it address the underlying business decision by Gilat to engage in the Merger or the terms of the Merger Agreement or the documents referred to therein, including the form or structure of the Merger Consideration or the Merger or any term, aspect or implication of any voting agreement or other agreements, arrangements or understandings entered into in connection with, or contemplated by or resulting from, the Merger or otherwise. Jefferies’ opinion was limited to the fairness, from a financial point of view, of the Merger Consideration to holders of Gilat Shares (to the extent expressly specified in such opinion) without regard to individual circumstances of specific holders (whether by virtue of control, voting, liquidity, contractual arrangements or otherwise) which may distinguish such holders or the securities of Gilat held by such holders, and Jefferies’ opinion did not in any way address proportionate allocation or relative fairness. In addition, Jefferies was not asked to, and Jefferies’ opinion did not, address the fairness, financial or otherwise, of any consideration to the holders of any class of securities, creditors or other constituencies of Gilat, Comtech or any other party. Furthermore, Jefferies did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation or other consideration payable to or to be received by any officers, directors or employees, or any class of such persons, in connection with the Merger relative to the Merger Consideration or otherwise. Jefferies also expressed no view or opinion as to the actual value of Comtech Common Stock when issued in the Merger or the prices at which shares of Comtech Common Stock, Gilat Shares or any other securities may trade or otherwise be transferable at any time, including following the announcement or consummation of the Merger. The issuance of Jefferies’ opinion was authorized by Jefferies’ fairness committee.
In connection with rendering its opinion to the Gilat Board, Jefferies performed a variety of financial and comparative analyses, including those described below. The following summary is not a complete description of all analyses performed and factors considered by Jefferies in connection with its opinion. The preparation of a financial opinion is a complex process involving subjective judgments and is not necessarily susceptible to partial analysis or summary description. With respect to the selected public companies and selected precedent transactions analyses summarized below, no company or transaction used as a
 
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comparison was identical or directly comparable to Gilat, Comtech or the Merger. These analyses necessarily involved complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the public trading, acquisition or other values of the companies or transactions concerned.
Jefferies believes that its analyses and the summary below must be considered as a whole and in context and that selecting portions of its analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying Jefferies’ analyses and opinion. Jefferies did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion, but rather arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole.
The estimates of the future performance of Gilat and Comtech in or underlying Jefferies’ analyses are not necessarily indicative of future results or values, which may be significantly more or less favorable than those estimates. In performing its analyses, Jefferies considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Gilat and Comtech. Estimates of the financial value of companies or businesses do not purport to be appraisals or necessarily reflect the prices at which companies, businesses or securities actually may be sold or acquired. Accordingly, the estimates used in, and the implied reference ranges resulting from, any particular analysis described below are inherently subject to substantial uncertainty and should not be taken as Jefferies’ view of the actual value of Gilat, Comtech or their respective businesses or securities.
The Merger Consideration was determined through negotiations between Gilat and Comtech, and the decision of Gilat to enter into the Merger Agreement was solely that of the Gilat Board. Jefferies’ opinion and financial analyses were only one of many factors considered by the Gilat Board in its evaluation of the Merger Consideration and should not be viewed as determinative of the views of the Gilat Board or Gilat management with respect to the Merger or the consideration payable in the Merger or whether the Gilat Board would have been willing to agree to different consideration in the Merger.
Financial Analyses
The summary of the financial analyses described under “— Financial Analyses” is a summary of the material financial analyses reviewed with the Gilat Board and performed by Jefferies in connection with its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand Jefferies’ financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Jefferies’ financial analyses. The order in which the financial analyses summarized below appear does not necessarily reflect the relative importance or weight given to such analyses. For purposes of the financial analyses described below, the term “implied per share Merger Consideration” means an implied value of  $10.31 per share based on the cash consideration of  $7.18 per share and, for the stock consideration, the exchange ratio of 0.08425 of a share of Comtech Common Stock for each outstanding Gilat Share and the closing price of Comtech Common Stock on January 28, 2020 of  $37.10 per share.
Gilat Financial Analyses
Selected Public Companies Analysis.   Jefferies reviewed publicly available financial, stock market and operating information relating to Gilat and the following four selected publicly traded companies in North America, Western Europe or Israel in the communications hardware and services industries that Jefferies considered generally relevant for purposes of an analysis of Gilat, collectively referred to as the “Gilat selected companies:”

CalAmp Corp.

Comtech

KVH Industries, Inc.

ORBCOMM Inc.
 
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Jefferies reviewed, among other information, enterprise values, calculated as fully diluted equity values based on closing stock prices on January 28, 2020 plus total debt and non-controlling interests less cash (including restricted cash) and cash equivalents, as applicable, as a multiple of calendar year 2020 and calendar year 2021 estimated earnings before interest, taxes, depreciation and amortization, adjusted for one-time and non-recurring items, referred to as adjusted EBITDA. Financial data of the Gilat selected companies were based on publicly available research analysts’ estimates, public filings and other publicly available information and calendarized or utilizing fiscal year information (as applicable). Financial data of Gilat was based both on the base case and upside case estimates of Gilat’s management.
The overall low to high calendar year 2020 and calendar year 2021 estimated adjusted EBITDA multiples observed for the Gilat selected companies were 7.3x to 15.3x (with a median of 9.7x) and 6.9x to 9.8x (with a median of 8.5x), respectively. Jefferies then applied selected ranges of calendar year 2020 and calendar year 2021 estimated adjusted EBITDA multiples of 9.0x to 11.0x and 7.5x to 9.5x, respectively, derived from the Gilat selected companies to corresponding data of Gilat based both on the base case and upside case estimates of Gilat’s management (there was no difference between Gilat management’s base case and upside case for Gilat’s calendar year 2020 estimated adjusted EBITDA). This analysis indicated the following approximate implied per share equity value reference ranges for Gilat, as compared to the implied per share Merger Consideration:
Implied Per Share Equity Value Reference Ranges Based On:
Implied Per Share
Merger Consideration
Base Case and
Upside Case
CY2020E
Adjusted EBITDA
Base Case
CY2021E
Adjusted EBITDA
Upside Case
CY2021E
Adjusted EBITDA
$9.05 – $10.65
$7.99 – $9.64
$8.80 – $10.66
$10.31
Selected Precedent Transactions Analysis.   Jefferies reviewed, among other things, financial information for the following 12 selected transactions with targets in the communications and satellites industry that Jefferies considered generally relevant for purposes of analysis, collectively referred to as the “selected transactions:”
Announced
Acquiror
Target
July 2019

Parsons Corporation

QRC, LLC
June 2019

Insight Enterprises, Inc.

PCM, Inc.
March 2019

Singapore Technologies Engineering (Europe) Ltd

Newtec Group NV
April 2018

Affiliates of Searchlight Capital Partners, L.P.

Mitel Networks Corporation
December 2017

Mercury Systems, Inc.

Themis Computer
December 2017

TTM Technologies, Inc.

Anaren, Inc.
July 2017

Mitel US Holdings, Inc.

ShoreTel, Inc.
July 2017

Speedcast International Limited

UltiSat, Inc.
March 2017

The KEYW Corporation

Sotera Defense Solutions, Inc.
December 2016

Teledyne Technologies Incorporated

e2v technologies plc
February 2016

J.F. Lehman & Company

API Technologies Corp.
June 2015

Ultra Electronics Holdings plc

Kratos Defense & Security Solutions, Inc. (electronic products division)
Jefferies reviewed transaction values of the selected transactions, calculated as the consideration paid or proposed to be paid in the selected transactions, as a multiple of the target companies’ or division’s last 12 months adjusted EBITDA as reported prior to or as of the applicable announcement dates of such transactions. Financial data of the selected transactions and Gilat were based on public filings and other publicly available information.
 
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The overall low to high last 12 months adjusted EBITDA multiples observed for the selected transactions were 9.4x to 50.9x (with a median of 13.0x). Jefferies then applied a selected range of last 12 months adjusted EBITDA multiples derived from the selected transactions of 12.0x to 14.0x to Gilat’s last 12 months adjusted EBITDA as of September 30, 2019. This analysis indicated the following approximate implied per share equity value reference range for Gilat, as compared to the implied per share Merger Consideration:
Implied Per Share Equity Value Reference Range
Implied Per Share Merger Consideration
$9.71 – $11.02
$10.31
Discounted Cash Flow Analysis.   Jefferies performed a discounted cash flow analysis of Gilat by calculating the estimated present value of the stand-alone unlevered, after-tax free cash flows that Gilat was forecasted to generate during the fiscal years ending December 31, 2020 through December 31, 2024 based both on the base case and upside case estimates of Gilat’s management and both before and after taking into account the present value (as of December 31, 2019) of net operating loss carryforwards expected by Gilat management to be utilized during the forecast period assuming no limitations to such utilization were applicable. For purposes of this analysis, stock-based compensation was treated as a cash expense. Implied terminal values of Gilat were derived by applying to Gilat’s terminal year unlevered after-tax free cash flows a selected range of perpetuity growth rates of 1.5% to 2.5%. The present values (as of December 31, 2019) of the cash flows and terminal values were then calculated using a selected discount rate range of 8.0% to 9.0%. This analysis indicated the following approximate implied per share equity value reference ranges for Gilat, as compared to the implied per share Merger Consideration:
Implied Per Share Equity Value Reference Ranges Based On:
Implied Per Share
Merger Consideration
Base Case
Upside Case
Without NOLs
With NOLs
Without NOLs
With NOLs
$8.53 – $10.85
$8.76 – $11.08
$13.77 – $18.04
$14.01 – $18.28
$10.31
Comtech Financial Analysis
Selected Public Companies Analysis.   Jefferies reviewed publicly available financial, stock market and operating information of Comtech and the following seven selected publicly traded companies in North America, Western Europe or Israel in the communications hardware and services industries that Jefferies considered generally relevant for purposes of an analysis of Comtech, collectively referred to as the “Comtech selected companies:”

Cubic Corporation

Gilat

Kratos Defense & Security Solutions, Inc.

KVH Industries, Inc.

ORBCOMM Inc.

Ultra Electronics Holdings plc

Viasat, Inc.
Jefferies reviewed, among other information and to the extent available, enterprise values, calculated as fully diluted equity values based on closing stock prices on January 28, 2020 plus total debt and non-controlling interests less cash and cash equivalents (as applicable), as a multiple of calendar year 2020 and calendar year 2021 estimated adjusted EBITDA. Financial data of the Comtech selected companies were based on publicly available research analysts’ estimates, public filings and other publicly available information and calendarized or utilizing fiscal year information (as applicable). Financial data of Comtech was based on publicly available research analysts’ estimates, public filings, other publicly available information and estimates of Comtech’s management and calendarized for comparative purposes.
The overall low to high calendar year 2020 and calendar year 2021 estimated adjusted EBITDA multiples observed for the Comtech selected companies were 7.3x to 24.6x (with a median of 13.0x) and 6.9x to 20.1x (with a median of 9.0x), respectively. Jefferies noted that, based on estimates of Comtech’s management, the calendar year 2020 and calendar year 2021 estimated adjusted EBITDA multiples observed for Comtech
 
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were 10.6x and 10.0x, respectively, and, based on publicly available research analysts’ estimates, the calendar year 2020 estimated adjusted EBITDA multiple observed for Comtech was 10.2x (publicly available research analysts’ estimates for Comtech were not available for calendar year 2021).
Certain Additional Information
Jefferies observed certain additional information that was not considered part of Jefferies’ financial analysis with respect to its opinion but was noted for informational purposes, including the following:

the historical trading performance of Gilat Shares and Comtech Common Stock during the 52-week period ended January 28, 2020, which indicated low and high closing prices for Gilat Shares during such 52-week period of  $7.36 per share and $10.29 per share, respectively, and low and high closing prices for Comtech Common Stock during such 52-week period of  $21.15 per share and $37.79 per share, respectively;

publicly available research analysts’ stock price targets for Gilat Shares and Comtech Common Stock, which indicated a share price target for Gilat Shares of  $10.50 per share and a stock price target range for Comtech Common Stock of  $35.00 to $44.00 per share; and

implied premiums paid or proposed to be paid in selected mergers and acquisition transactions announced from January 1, 2017 through January 28, 2020 involving publicly traded North American, Western European and Israeli target companies in the technology and communications industry with equity values of approximately $250 million to $1.0 billion based on the closing stock prices of the target companies involved in such transactions one trading day and 20 trading days prior to public announcement of such transactions; applying the implied premiums derived from the overall 25th and 75th percentiles of the one-day premiums observed from such transactions to the closing price of Gilat Shares on January 17, 2020 (the last trading day prior to market speculation regarding a possible acquisition of Gilat) of  $9.15 per share and the implied premiums derived from the overall 25th and 75th percentiles of the 20-day premiums observed from such transactions to the closing price of Gilat Shares on December 19, 2019 (20 trading days prior to market speculation regarding a possible acquisition of Gilat) of  $7.62 per share resulted in an overall approximate implied equity value reference range for Gilat of  $9.76 to $13.67 per share.
Miscellaneous
Gilat has agreed to pay Jefferies for its financial advisory services with respect to its opinion to the Gilat Board a fee of  $1.25 million, which was payable upon delivery of Jefferies’ opinion to the Gilat Board. In addition, Gilat agreed to reimburse Jefferies for certain expenses incurred in connection with Jefferies’ engagement and to indemnify Jefferies and related parties against liabilities, including liabilities under federal securities laws, arising from Jefferies’ engagement.
As the Gilat Board was aware, although Jefferies and its affiliates did not provide financial advisory or financing services to Gilat unrelated to the Merger or to Comtech during the two-year period prior to the date of Jefferies’ opinion for which Jefferies and its affiliates received compensation, Jefferies and its affiliates may in the future provide such services to Gilat, Comtech and/or their respective affiliates, for which services Jefferies and its affiliates would expect to receive compensation. In the ordinary course of business, Jefferies and its affiliates may trade or hold securities or financial instruments (including loans and other obligations) of Gilat, Comtech and/or their respective affiliates for Jefferies’ own account and for the accounts of Jefferies’ customers and, accordingly, may at any time hold long or short positions or otherwise effect transactions in those securities or financial instruments.
Jefferies was selected as a financial advisor to the Gilat Board in connection with the Merger because, among other things, Jefferies is an internationally recognized investment banking firm with substantial experience in merger and acquisition transactions and based on its familiarity with Gilat’s and Comtech’s businesses and industry. Jefferies is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, leveraged buyouts, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities and private placements.
 
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Certain Unaudited Projections of Gilat
Gilat historically has publicly made available its management objectives for the current fiscal year, but has been cautious of issuing management objectives or making forecasts or projections for longer periods given the unpredictability of the underlying assumptions and estimates and lack of long-term visibility. However, in connection with the Merger, Gilat’s management prepared projections regarding Gilat’s future operations for the calendar years 2020 through 2024 (the “Gilat Management Projections”). The Gilat Management Projections consist of  (i) the 2020 budget prepared by Gilat’s management which serve as the base case projections for 2020 and a base case assumption regarding year-over-year revenue growth in calendar years 2021 through 2024, and (ii) the upside case projections that were prepared by Gilat’s management to reflect more optimistic assumptions regarding year-over-year revenue growth in calendar years 2021 through 2024, as well as numerous other variables and assumptions.
The financial information concerning Gilat’s forecast set forth below is included in this proxy statement/​prospectus only because it was made available by Gilat’s management to the Gilat Board for the purpose of evaluating the Merger, to Gilat’s financial advisor, Jefferies, for its use and reliance in connection with its financial analyses and opinion to the Gilat Board as described in the section “Opinion of Jefferies LLC,” and to Comtech and its advisors in connection with their review of Gilat, and such information may not be appropriate for other purposes.
At the time of preparation, the Gilat Management Projections did not reflect Gilat’s normal quarterly or annual review procedures. There was not any assurance (and there remains no assurance) that the actual final results of the relevant periods would not differ from the estimates of the Gilat Management Projections, and any such differences could be material. While presented with numerical specificity, the Gilat Management Projections reflect numerous judgments, estimates and assumptions with respect to industry performance, general business, economic, regulatory, market and financial conditions and other future events, as well as matters specific to Gilat’s business, all of which are inherently subjective, uncertain and difficult to predict and many of which are beyond Gilat’s control. As such, the Gilat Management Projections constitute forward-looking information and are subject to risks and uncertainties that could cause actual results to differ materially from the results forecasted, including risks and uncertainties relating to Gilat’s business (including its ability to achieve strategic goals, objectives and targets over applicable periods), industry performance, general business and economic conditions and other factors described in this proxy statement/​prospectus and in Gilat’s periodic reports incorporated by reference to this proxy statement/prospectus. In particular, following the date the Gilat Management Projections were prepared and Gilat entered into the Merger Agreement, there has been an outbreak and global spread of the coronavirus pandemic. As a result, during the first quarter of 2020, Gilat has experienced a significant reduction in its business and expects to record a loss for the first quarter of 2020, and Gilat is unable at this time to estimate the extent of the effect of coronavirus on its business. The effects of coronavirus on Gilat’s business were not taken into account by Gilat when preparing the Gilat Management Projections prior to entering into the Merger Agreement and may further impact the likelihood that the projected results set forth in the Gilat Management Projections will be realized. Please see the sections entitled “Special Note Regarding Forward-Looking Statements” and “Where You Can Find More Information.” The Gilat Management Projections also reflect numerous variables, expectations and assumptions available at the time that they were prepared as to certain business decisions that are subject to change. As a result, actual results may differ materially from those contained in the Gilat Management Projections.
There can be no assurance that the projected results will be realized or that actual results will not be significantly different than projected. Gilat’s ability to forecast its results has been limited and historically Gilat has had to revise its public guidance on management objectives from time to time. Accordingly, the inclusion of a summary of the Gilat Management Projections in this proxy statement/prospectus should not be regarded as an indication that any of Gilat, Comtech or their respective officers, directors, employees, affiliates, advisors or representatives considered the Gilat Management Projections to be necessarily achievable or predictive of any actual future events, and the Gilat Management Projections should not be relied upon as such nor should the information contained in the Gilat Management Projections be considered appropriate for other purposes. None of Gilat, Comtech or their respective officers, directors, employees, affiliates, advisors or representatives can give you any assurance that actual results will not differ materially from the Gilat Management Projections, and Gilat does not undertake any obligation to update or otherwise revise or
 
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reconcile the Gilat Management Projections to reflect circumstances existing after the date the Gilat Management Projections were generated or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying these forecasts are shown to be inappropriate. Since the forecasts cover multiple years, such information by its nature becomes less meaningful and predictive with each successive year. None of Gilat or its officers, directors, employees, affiliates, advisors, or representatives has made or makes any representation to any shareholder or other person regarding Gilat’s ultimate performance compared to the information contained in the Gilat Management Projections or that the forecasted results will be achieved. Gilat has made no representation to Comtech, in the Merger Agreement or otherwise, concerning the Gilat Management Projections.
The Gilat Management Projections do not take into account any circumstances or events occurring after the date they were prepared, including the announcement of the Merger. The Gilat Management Projections do not take into account the effect of any failure to occur of the Merger and should not be viewed in that context.
The Gilat Management Projections were not prepared with a view toward public disclosure or toward complying with generally accepted accounting principles, the published guidelines of the SEC regarding forecasts or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information but, in the view of Gilat’s management, were prepared on a reasonable basis. The Gilat Management Projections were prepared by, and are the responsibility of, Gilat’s management. Neither Gilat’s independent registered public accounting firm, nor any other independent accountants, have audited, reviewed, examined, compiled or applied agreed upon procedures with respect to the following Gilat Management Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the Gilat Management Projections. This information is not fact and should not be relied upon as being necessarily indicative of actual future results, and readers of this document are urged not to place undue reliance on the prospective financial information set forth below. The report of Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young Global, incorporated by reference in this proxy statement/prospectus relates to Gilat’s previously issued financial statements. It does not extend to the Gilat Management Projections and should not be read to do so. Gilat urges all shareholders to review Gilat’s most recent filings with the SEC for a description of Gilat’s reported financial results. Please see the section entitled “Where You Can Find Additional Information.”
The inclusion of the Gilat Management Projections is not deemed an admission or representation by Gilat that the Gilat Management Projections are viewed by Gilat as material information of Gilat or the Surviving Company. The Gilat Management Projections are not included in this proxy statement/prospectus in order to induce any Gilat shareholder to approve the Merger Proposal.
GILAT DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE GILAT MANAGEMENT PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING SINCE THEIR PREPARATION OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE UNDERLYING ASSUMPTIONS ARE SHOWN TO BE INAPPROPRIATE, OR TO REFLECT CHANGES IN GENERAL ECONOMIC OR INDUSTRY CONDITIONS.
Subject to the foregoing qualifications, the following is a summary of the Gilat Management Projections:
Gilat Management Base Case Projections.
(in millions)
2020E
2021E
2022E
2023E
2024E
Revenues
$ 302.2 $ 313.7 $ 321.0 $ 320.6 $ 332.2
Adjusted EBITDA(1)
$ 46.0 $ 47.2 $ 49.2 $ 50.9 $ 52.3
Unlevered Free Cash Flow(2)
$ 1.6 $ 34.3 $ 21.2 $ 25.6 $ 24.3
(1)
Adjusted EBITDA is defined as Gilat’s GAAP operating income excluding the effect of non-cash stock based compensation, depreciation and amortization costs, including lease incentive amortization,
 
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trade secrets and other litigation expenses or income, re-organization costs, expenses for tax contingencies to be paid under an amnesty program and initial recognition of deferred tax asset with respect to carry-forward losses.
(2)
Unlevered Free Cash Flow is defined as Gilat’s tax-affected Adjusted EBITDA, subtracting stock-based compensation, adjusting for changes in net working capital and subtracting capital expenditures.
Gilat Management Upside Case Projections.