Gilat buys Comtech satellite unit for $157.5 million to scale defense business

Gilat Satellite Networks will more than double its defense revenue with a $157.5 million acquisition of Comtech's satellite and space communications business, creating a combined entity with more than $700 million in annual sales.

Gilat Satellite Networks Ltd. agreed to buy most of Comtech Telecommunications Corp.'s satellite and space communications segment for $157.5 million in cash, creating a combined company with more than $700 million in projected annual revenue. The deal, unanimously approved by both boards, positions the Israeli firm to compete for larger defense and space contracts.

"This acquisition represents a transformative milestone in Gilat's evolution into a larger, more diversified defense communications and space technology company," said Adi Sfadia, chief executive officer of Gilat.

The acquired business generated adjusted revenue of $187.8 million and adjusted EBITDA of $14.9 million in Comtech's fiscal year ended July 31, 2025. For the trailing twelve months through Jan. 31, 2026, those figures rose to $195.2 million and $16.8 million, respectively. Gilat expects the deal to more than double its defense revenue and contribute to a combined adjusted EBITDA of $80 million.

The transaction, expected to close by year-end 2026, requires clearance from the Committee on Foreign Investment in the United States, the Federal Trade Commission and the Department of Justice. Gilat plans to fund the purchase entirely from its existing cash, which stood at about $170 million at the end of the first quarter.

Deal Structure and Strategic Rationale

Gilat will acquire the assets on a cash-free, debt-free basis, with $10 million paid as a deposit at signing. The remaining balance is subject to working capital adjustments. Comtech expects net proceeds of about $143 million to $145 million after deducting an estimated $12.5 million to $14.5 million in transaction expenses, which it will use to reduce debt.

The acquisition adds satellite ground infrastructure for GEO, MEO and LEO constellations, over-the-horizon Troposcatter beyond line-of-sight communications, and engineering services for satellites and launch vehicles. The segment serves the U.S. Department of Defense, allied defense agencies, NASA, satellite operators and energy companies.

"This transaction enables our diversification into adjacent domains, including space-based infrastructure and Troposcatter BLOS communications, while expanding our access to a broader set of customers, including NASA, other space agencies, and additional defense and military organizations worldwide," Sfadia said.

What Happens to Comtech

Comtech will retain certain cyber-focused assets from the segment and rebrand around its Allerium public safety technology business. The remaining company reported about $249 million in revenue for the trailing twelve months ended April 30, 2026, with a funded backlog of $554 million. Pro forma adjusted EBITDA for the retained business was about $34 million, Comtech said.

Ken Traub, chairman, president and CEO of Comtech, said the sale "represents a significant milestone in Comtech's transformation and reflect the successful execution of our strategy." The company expects annual cost savings of $11 million to $13 million after a one-year transition period.

Oppenheimer & Co. served as financial advisor to Gilat, with Naschitz, Brandes, Amir & Co. as legal counsel. Quilty Space acted as business advisor. TD Securities advised Comtech, with Norton Rose Fulbright as legal counsel.

This article is for informational purposes only and does not constitute investment advice.