Veritas Capital Pays $525 Million for CPI International

New York-based private equity firm Veritas Capital said it will pay $525 million for telecom equipment manufacturer CPI International, Reuters reported. The firm will pay $19.50 per share in cash, representing a 35% premium over CPI’s closing price Wednesday. Palo Alto, Calif.-based CPI makes microwave and radio-frequency products for defense, communications and other industries. The firm was previously an acquisition target for its rival Comtech Telecommunications, which offered $372 million for the company before dropping the bid three months ago, Reuters said.

(Reuters) – CPI International Inc agreed to be bought by an affiliate of private-equity firm Veritas Capital for $19.50 per share in cash, three months after larger rival Comtech Telecommunications dropped plans to buy the telecom equipment maker.

The offer from New York-based Veritas Capital, which focuses on the defense and government-services sector, is at a 35 percent premium to CPI’s Wednesday close. The deal is valued at about $525 million, CPI said.

In September, Comtech had offered to pay about $372 million in cash and issue about 4.4 million shares for CPI, in what could have been its largest acquisition ever.

Veritas Capital also owns Aeroflex Inc, a provider of microelectronic and testing equipment to aerospace markets, and Vangent, which provides information management and business processing services.

Earlier this year, Veritas sold military-services contractor DynCorp International to Cerberus Capital Management [CBS.UL] for $1 billion.

Shares of Palo Alto, California-based CPI, which makes microwave and radio-frequency products for defense, communications, medical and other applications, rose 29 percent to $18.65 in trading before the bell.

They have risen 43 percent over the last year. (Reporting by Saqib Iqbal Ahmed in Bangalore; Editing by Vinu Pilakkott and Don Sebastian)