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Ceragon urges shareholders to reject Aviat’s increased takeover bid

Less than a week after Aviat Networks Inc. raised its bid for Ceragon, the board of directors of the Israeli wireless transport technology company has announced its rejection of the bid. Aviat Networks, which competes with Ceragon in the telecommunications equipment market, holds 5% of the company’s shares, and since late June has been trying to change the composition of the Ceragon board with a view to a takeover.

Aviat Networks originally offered $2.8 per share for Ceragon, or $235 million in total. Last week, after the Ceragon recommended shareholders that they should reject the offer, the price was raised to $3.08 per share, or $259 million in total. The offer consists of $2.8 in cash and the rest in Aviat Networks shares. Ceragon, headed by CEO Doron Arazi and chairperson Zohar Zisapel, has a current market cap of $224 million. Its share price has risen by 28% since the control battle began.

Aviat Networks’ market cap is $352 million.

In calling on shareholders to reject the latest offer from Aviat Networks as well, the Ceragon board points out that it Is not an official offer but an “indication of interest” (IOI). In a letter to Aviat Networks president and CEO Peter Smith, the board directors write that they have examined the new bid in consultation with legal and financial advisors, and have decided that it significantly undervalues the company and is not in accord with the interests of Ceragon and its shareholders.

In its letter to Ceragon shareholders, the company’s board states: “Ceragon is focused on maximizing value for all shareholders and we remain open to exploring a transaction with Aviat or anyone else, but only if such combination delivers full, fair and certain value to Ceragon shareholders. We have met with Aviat multiple times (including with directors from our respective boards) to explore a transaction. However, Aviat’s Revised IOI continues to fall far short.”

The Ceragon board states that the company’s business is enjoying strong momentum, that it has a 25% market share, and that in the first half of 2022 its orders totaled $179 million, $39 million of which came from North America.

The board cites several responses of investment banks to its financials, for example Needham, whose analysts write, “We expect revenues to accelerate as supply chains improve,” and Aegis, which writes: “We continue to believe that positive mix shift to 5G bookings will represent a key driver for both top line growth as well as margin expansion opportunity for Ceragon longer term.”

As a Ceragon shareholder, Aviat Networks is entitled to propose motions at the shareholders’ meeting, and it seeks to replace some of the Ceragon directors. The Ceragon board urges the company’s shareholders not to support Aviat Networks’ move.

Aviat Networks’ market cap is $352 million. en.globes

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