Ceragon continues to dodge Aviat’s overtures

Wireless transport company Ceragon continues to attempt to avoid the acquisition attentions of competitor Aviat Networks, saying that Aviat’s offers don’t properly value Ceragon.

Aviat has increased its offer consisting of $2.80 in cash and $0.28 in equity consideration, from an earlier offer of $2.80 per share (the company says it has also previously offered $3.25 a share during its ongoing efforts to acquire Ceragon over the past year). As Ceragon continued to reject Aviat’s offers, the latter company eventually made its intent public and even set up a website making its case to shareholders, and the two companies have been releasing dueling statements and shareholder letters on the situation.

Aviat already owns more than 5% of the company and says that it is Ceragon’s third-largest shareholder. It is attempting to take over Ceragon’s board with a slate of its own nominees, which Ceragon says violates the company’s articles of association.

In a letter to shareholders this week, Ceragon described Aviat’s offer of $3.08 per share as an “low-ball, highly conditional bid” from a competitor that “significantly [undervalues] the Company and is not in the best interests of Ceragon shareholders.”

To be clear, 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,” said Ceragon in the letter (underlining theirs). “We have met with Aviat multiple times (including with directors from our respective boards) to explore a transaction. However, Aviat’s [revised offer] continues to fall far short.”

Ceragon pointed to its recent second-quarter results as evidence that it has significant momentum and a higher value than Aviat is offering, and claims it has 25% market share. It said that it has $39 million in bookings in North America, which it referred to as “Aviat’s backyard” and that North America is now tied with India as Ceragon’s largest market.

In addition, Ceragon’s letter accused Aviat of having “a track record of abandoning late-stage negotiations.” The letter continues: “On multiple occasions, including with Ceragon as well as another company with which our directors are involved, Aviat abandoned negotiations after the companies had exchanged confidential and sensitive information and had drafted a near-final agreement.”

Aviat responded with a letter of its own to “correct the latest false claims and mischaracterizations”, including disputing Ceragon’s characterization of its results. Aviat President and CEO Peter Smith has called Ceragon’s quarterly results “disappointing” and in the latest statement, Aviat notes that Ceragon “lowered its annual guidance in the first quarter of 2022” and missed analysts’ consensus expectations, as well as having negative free cash flow for half a dozen quarters. “The truth is that Ceragon is struggling on its own, and is not going to achieve outlandish price targets, or even its own projections,” Aviat said (bolding theirs). “We continue to believe that Ceragon would see tremendous advantages from being part of a larger platform with more scale and resources as part of Aviat.” Smith himself has also said that Aviat remains “committed to consummating a transaction with Ceragon and taking all the necessary steps to make that happen.”

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