The Deal: Globecomm Sells Itself to Wasserstein for $340M

Tickers in this article: GCOM
NEW YORK (The Deal) -- Satellite communications and broadcasting service company Globecomm Systems will be acquired by an affiliate of private investment firm Wasserstein & Co. for $14.15 a share, or $340 million, the target announced Monday, Aug. 26.

The deal concludes a strategic review for the target active since the beginning of the year when Hauppauge, N.Y.-based Globecomm tapped Needham & Co. to advise it on strategic alternatives.

The target was facing pressure from activist investors, among them Chicago-based investment firm Discovery Group which had told the company last year it should explore a sale. Other investors more recently raised the possibility of a proxy fight.

The purchase price represents a 21.9% premium to Globecomm's share price on Jan. 14, the day the strategic review was announced. Globecomm closed at $14.40 per share Friday.

Globecomm's board unanimously approved the purchase and the deal should close in the fourth quarter of 2013.

One industry observer called the deal a good way for the private equity firm to gain a foothold in the cutting edge of the telecom world.

"Globecomm's got a really good position in the future of telecom," said Jimmy Schaeffler, head of telecom valuation and consulting firm Carmel Group Monday. "They've got good engineers, a good reputation, and good executive management."

Wasserstein will fund the purchase via cash and debt financing through Highbrige Principal Strategies LLC, which already has a commitment letter in place.

"Globecomm is a leader in developing and managing complex communications solutions with a strong track record of growth and innovative engineering that leverages its global communications network," commented Anup Bagaria, co-managing partner of Wasserstein. "Globecomm has also made successful investments in new product development that we believe will drive future growth in both the company's existing and new markets."

For the year ending June 30, 2012, Globecomm reported $381.9 million in sales, $28.5 million in net income, and $50.9 million in Ebitda, compared to $274.1 million in sales, $8.9 million, and $24.9 million in Ebitda. The takeout multiple was thus around 6.6 times Ebitda, the median for satellite communications companies