Raises Concerns About Board's "Objectivity and
Independence" and Questions its "Ability to Perform its Proper
Oversight Role"
Recognizes Ceragon's track record of
underperformance and questions standalone strategy
Affirms fair value of Aviat's acquisition
proposal
AUSTIN,
Texas, Aug. 18, 2022 /PRNewswire/ -- Aviat
Networks, Inc. (NASDAQ: AVNW) ("Aviat"), the leading expert in
wireless transport solutions, today announced that independent
proxy advisory firm Glass Lewis has recommended that shareholders
of Ceragon Networks Ltd. (NASDAQ: CRNT) ("Ceragon") vote FOR the
removal of three members of Ceragon's Board of Directors ("Board"),
Yael Langer, Ira Palti, and David
Ripstein, at the upcoming Extraordinary General Meeting of
Shareholders on August 23, 2022.
Glass Lewis also recommended that Ceragon shareholders vote FOR
three of Aviat's highly-qualified, independent nominees, Paul
Delson, Jonathan F. Foster, and Dennis
Sadlowski.
In its August 17, 2022 report,
Glass Lewis questioned the independence and objectivity of the
three directors Aviat seeks to remove and questioned the motives
behind their refusal to engage with Aviat:
- "We believe Aviat has identified valid concerns regarding
the independence and objectivity of the current Ceragon board,
which may explain the board's prickly response to Aviat's
approaches and its refusal to more meaningfully engage with a
prospective suitor."1
- "We view such relationships [as those between Ceragon
directors] as potentially creating conflicts for directors, as
they may be forced to weigh their own interests in relation to
shareholder interests when making board decisions."
- "We note further that three of the Company's seven directors
are either affiliated with the Company or are insiders. We believe
this raises further concerns about the objectivity and
independence of the board and its ability to perform its proper
oversight role."
- "Ultimately, we are concerned that these apparent conflicts
may have manifested themselves in the board's recent evaluation of
Aviat's acquisition proposal. In our view, given the ties and
lengthy tenures of certain Ceragon directors, shareholders have
less assurance that Aviat's proposal has received a full, fair and
independent evaluation by a sufficiently independent board of
directors. In that regard, we believe Aviat has provided
evidence to establish sufficient concern that its advances may have
been rebuffed by the Ceragon board for reasons other than what we
consider are in the best interests of shareholders."
- "We believe there is suitable cause for investors to support
Board change at this time."
In its report this week, Glass Lewis raised concerns about the
Board's independence, noting "certain directors' past and current
affiliations with Ceragon's founder and chairman, Mr.
Zisapel…[including that] Ms. Langer and Mr. Ripstein [have] each
served in various positions, including general counsel and CEO,
respectively, at other Rad-Bynet group companies established by Mr.
Zisapel." Unfortunately, this is not the first time that Glass
Lewis has expressed similar concerns. In its report issued in
connection with Ceragon's 2021 Annual Meeting, Glass Lewis also
raised its concerns about a lack of independence on the Board and
recommended opposing the election of Ms. Langer, specifically
citing "related party transactions between the Company and Mr.
Zisapel's Rad-Bynet group." Since then, the Board has done nothing
to address the apparent governance shortfalls, which have now cost
shareholders dearly. It is time that the Board stop ignoring
significant and valid concerns about governance and act with
independence.
In its report, Glass Lewis called out Ceragon's track record of
underperformance and unwillingness to change course due to the
Board's lack of independence. The report also recognizes that
Aviat's proposal offers a fair value for Ceragon and would likely
provide more value to shareholders than the Company's standalone
strategy:
- "Purely from a valuation perspective, we believe Aviat's
revised proposal is sufficiently within a range of fair value to
warrant more serious, advanced and constructive discussions with
respect to the proposal than it appears Ceragon has been willing to
enter into to date. In our view, a more welcoming stance, good
faith discussions regarding the potential benefits of a combination
and the sharing of due diligence information could facilitate a
reasonably acceptable outcome for all parties involved, possibly
even resulting in an improvement in terms for Ceragon and its
shareholders."
- "During the five years preceding Aviat's offer, Ceragon
delivered a negative return of -16.4%, while Aviat generated a
return of 180.8% and the other five peer companies delivered an
average return of 63.3%. In just the last three years, Ceragon's
TSR was an even worse -30.1% and Aviat's TSR was an even better
290.2%, while the other peers averaged a nil return over that
period (Source: S&P Capital IQ). This analysis suggests that
investors have consistently been unwilling to buy into
value-creation narratives promulgated by Ceragon management and the
board. We see little reason to expect this to
change."
- "Were Ceragon shareholders to hitch their wagons to
Aviat, which Aviat's proposal enables them to do via the stock
component of the offered consideration, they might find
themselves better off."
Although Ceragon likes to claim that it is undervalued, Glass
Lewis agrees with Aviat that "[analysts'] price targets are
aspirational, particularly in light of Ceragon's recent operational
performance, other challenges and industry-wide supply chain
issues." Glass Lewis notes that it would not be unusual for Ceragon
analysts to lower price targets following a meaningful decline in
the Company's trading price, as they have been shown to do in the
past.
"Glass Lewis has validated our serious concern that Ceragon's
Board lacks independence and is therefore unable to fulfill its
fiduciary duty to act in the best interests of all shareholders,"
said Aviat President and CEO Peter
Smith. "Furthermore, Glass Lewis recognizes that this lack
of independence has led the Ceragon Board to fail in fully and
objectively evaluating our proposal, which the report notes offers
a fair value in light of Ceragon's long history of
underperformance."
Mr. Smith added, "Both Glass Lewis and ISS have now recognized
the conflicts that plague Ceragon's Board. Given Cergaon's
anti-shareholder charter, if not removed next Tuesday, these same
directors will not face reelection until 2024, despite their
failure to negotiate a deal and continued poor performance at the
Company. In fact, if not removed, these directors may become
further emboldened to favor the interests of Mr. Zisapel and their
own positions over the interests of shareholders. Shareholders can
stand by and continue to allow this Board to shirk its
responsibilities and oversee the woeful destruction of value, or
they can push for Board change now and elect truly independent
directors that will be motivated only by their fiduciary
responsibility and explore all avenues to create value. We urge
shareholders to vote FOR ALL FIVE of Aviat's director
nominees on the GOLD proxy card and remove the
conflicted directors that continue to put their own interests
first."
YOUR VOTE IS CRUCIAL. For further information on how your
vote FOR ALL FIVE Aviat's director nominees can
maximize shareholder value, please visit ValueForCeragon.com.
About Aviat Networks,
Inc.
Aviat Networks, Inc. is the leading expert in wireless
transport solutions and works to provide dependable products,
services and support to its customers. With more than one million
systems sold into 170 countries worldwide, communications service
providers and private network operators including state/local
government, utility, federal government and defense organizations
trust Aviat with their critical applications. Coupled with a long
history of microwave innovations, Aviat provides a comprehensive
suite of localized professional and support services enabling
customers to drastically simplify both their networks and their
lives. For more than 70 years, the experts at Aviat have delivered
high-performance products, simplified operations, and the best
overall customer experience. Aviat Networks is
headquartered in Austin, Texas. For more information,
visit www.aviatnetworks.com or connect with Aviat
Networks on Twitter, Facebook and LinkedIn.
Forward-Looking
Statements
The information contained in this document includes
forward-looking statements within the meaning of the safe harbor
provisions of the U.S. Private Securities Litigation Reform Act of
1995. Such statements include, without limitations, statements
regarding the proposed transaction between Aviat and Ceragon, the
results of the requested extraordinary general meeting of
shareholders of Ceragon, Ceragon's actions in connection therewith,
and any potential related litigation. All statements, trend
analyses and other information contained herein regarding the
foregoing beliefs and expectations, as well as about the markets
for the services and products of Aviat and trends in revenue, and
other statements identified by the use of forward-looking
terminology, including, without limitation, "anticipate,"
"believe," "plan," "estimate," "expect," "goal," "will," "see,"
"continue," "delivering," "view," and "intend," or the negative of
these terms or other similar expressions, constitute
forward-looking statements. Forward-looking statements are neither
historical facts nor assurances of future performance. Instead,
forward-looking statements are based on estimates reflecting the
current beliefs, expectations and assumptions of the senior
management of Aviat regarding the future of its business, future
plans and strategies, projections, anticipated events and trends,
the economy and other future conditions. Such forward-looking
statements involve a number of risks and uncertainties that could
cause actual results to differ materially from those suggested by
the forward-looking statements. Forward-looking statements should
therefore be considered in light of various important factors,
including those set forth in this document. Therefore, you should
not rely on any of these forward-looking statements. Important
factors that could cause actual results to differ materially from
estimates or projections contained in the forward-looking
statements include the following:
- the impact of COVID-19 on our business, operations and cash
flows;
- continued price and margin erosion as a result of increased
competition in the microwave transmission industry;
- our ability to realize the anticipated benefits of any proposed
or recent acquisitions, including our proposed transaction with
Ceragon, within the anticipated timeframe or at all, including the
risk that proposed or recent acquisitions will not be integrated
successfully;
- the results of the extraordinary general meeting of Ceragon's
shareholders;
- the impact of the volume, timing, and customer, product, and
geographic mix of our product orders;
- the timing of our receipt of payment for products or services
from our customers;
- our ability to meet projected new product development dates or
anticipated cost reductions of new products;
- our suppliers' inability to perform and deliver on time as a
result of their financial condition, component shortages, the
effects of COVID-19 or other supply chain constraints;
- the effects of inflation and the timing and extent of changes
in the prices and overall demand for and availability of our
inputs;
- customer acceptance of new products;
- the ability of our subcontractors to timely perform;
- weakness in the global economy affecting customer spending;
- retention of our key personnel;
- our ability to manage and maintain key customer
relationships;
- uncertain economic conditions in the telecommunications sector
combined with operator and supplier consolidation;
- our failure to protect our Intellectual property rights or
defend against Intellectual property infringement claims by
others;
- the results of our restructuring efforts;
- the ability to preserve and use our net operating loss
carryforwards;
- the effects of currency and interest rate risks;
- the effects of current and future government regulations,
including the effects of current restrictions on various commercial
and economic activities in response to the COVID-19 pandemic;
- general economic conditions, including uncertainty regarding
the timing, pace and extent of an economic recovery in the
United States and other countries where we conduct
business;
- the conduct of unethical business practices in developing
countries;
- the impact of political turmoil in countries where we have
significant business;
- the impact of tariffs, the adoption of trade restrictions
affecting our products or suppliers, a United
States withdrawal from or significant renegotiation of trade
agreements, the occurrence of trade wars, the closing of border
crossings, and other changes in trade regulations or relationships;
and
- Aviat's ability to implement our stock repurchase program or
the extent to which it enhances long-term stockholder value.
For more information regarding the risks and uncertainties for
Aviat's business, see "Risk Factors" in Aviat's Annual Report on
Form 10-K filed with the U.S. Securities and Exchange Commission
("SEC") on August 25, 2021, as well as other reports
filed by Aviat with the SEC from time to time. Aviat does not
undertake any obligation to update publicly any forward-looking
statement, whether written or oral, for any reason, except as
required by law, even as new information becomes available or other
events occur in the future.
Additional Information
This document does not constitute an offer to sell or exchange,
or the solicitation of an offer to buy or exchange, any securities,
nor will there be any sale of securities in any states or
jurisdictions in which such offer or sale or exchange would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
will be made except by means of a prospectus meeting the
requirements of section 10 of the Securities Act of 1933 or an
exemption therefrom.
In connection with any transaction between Aviat and Ceragon
that involves the issuance of Aviat shares to the Ceragon
shareholders, Aviat will file a registration statement with the
SEC. INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT, ANY
AMENDMENTS THERETO AND OTHER RELEVANT DOCUMENTS THAT MAY BE FILED
WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
TRANSACTION. Investors will also be able to obtain copies of the
registration statement and other documents containing important
information about each of the companies once such documents are
filed with the SEC, without charge, at the SEC's web site
at www.sec.gov.
Investor Contacts
Aviat Networks
Andrew Fredrickson
+1-408-501-6214
andrew.fredrickson@aviatnet.com
Okapi Partners LLC
Bruce Goldfarb / Chuck Garske / Teresa
Huang
+1-212-297-0720
info@okapipartners.com
Media Contact
Abernathy MacGregor
Sydney Isaacs / Jeremy Jacobs
+1-212-371-5999
sri@abmac.com / jrj@abmac.com
1 Permission to use quotations from Glass Lewis was
neither sought nor obtained. Emphasis added.
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SOURCE Aviat Networks, Inc.