Wireless transport company Aviat Networks has made public its efforts to buy competitor Ceragon, offering to acquire Ceragon for $2.80 per share in cash and announcing its intent to call a special shareholder meeting in an attempt to replace Ceragon board members to get a friendlier reception to its offer. Aviat already owns more than 5% of the company and says that it is Ceragon’s third-largest shareholder.
This is the latest move in an ongoing negotiation that thus far has been rejected by Ceragon.
“Over the past year, we have sought to engage on numerous occasions with Ceragon’s Board and management team to negotiate terms for a transaction that we are confident would deliver meaningful near- and long-term value for shareholders of both companies,” said Aviat President and CEO Peter Smith in a statement. “We have twice attempted to reasonably address concerns voiced by Ceragon, and have met only with delay and rejection. Along with Aviat’s Chairman, I traveled to Israel last week to meet in person with Ceragon’s Chairman, CEO, and a member of its board. They refused to engage with us in constructive discussions, instead making further demands for unorthodox and off-market provisions that seem intended only to delay, leaving us with no other option but to make Ceragon shareholders aware of our proposal.”
Aviat said in a company statement that it believes that “the combination of Aviat and Ceragon will create a leading global wireless transport specialist that is more efficient and competitive, and better positioned to provide greater innovation and service to their complementary customer bases.”
Smith added that Aviat “[looks] forward to giving Ceragon shareholders the opportunity to benefit from this combination. We believe they will recognize that our proposal provides compelling, immediate and certain value, substantially in excess of the value that would be generated for Ceragon shareholders if Ceragon were to remain a stand-alone entity. Although we very much prefer to negotiate a transaction with Ceragon on a friendly basis, we are prepared to take all steps necessary to pursue this transaction.”
Aviat says that it has called for a Ceragon shareholder meeting “for the purpose of increasing the size of the Ceragon board, removing three of Ceragon’s current directors, and electing independent, well-qualified new board leadership that would evaluate fairly the proposal and negotiate for the best outcome for Ceragon’s shareholders.”
A letter to Ceragon from Aviat President and CEO Peter Smith, which was provided to RCR Wireless News by Aviat, notes that previous proposals in November 2021 for $3.25 per share and April 2022 for $2.80 per share were rejected by Ceragon’s leadership as inadequate. Smith says in his letter that Ceragon’s top executives have avoided engagement on price discussions, insisted upon an exorbitant break-up fee in the event that the transaction was not completed, and other conditions that Aviat doesn’t find reasonable—hence the move to take the offer public and call for a shareholder meeting.
“Based on your response to our proposals to date, we believe the time has come for new board leadership that would evaluate our proposal and negotiate for the best outcome for Ceragon’s shareholders,” Smith said in his letter.
RCR Wireless News has reached out to Ceragon for comment and will update this story accordingly.