Gilat Satellite Networks chairman and CEO, Amiram Levinberg, describes the year-long process that has culminated in the acquisition of the firm by Meir Shamir and a group of his buddies from the Israel Air Force, as "a wonderful opportunity for the shareholders, customers and employees."

Gilat's board has approved the $475 million offer by the Israeli-U.S. group headed by businessman Meir Shamir, a former Phantom pilot. Bank Hapoalim has provided $315 million to finance the deal. In addition, Meir Shamir's publicly traded company Mivtach Shamir has also received a NIS 100 million loan from Clal Insurance.

Gilat, which develops and markets equipment and services for satellite communication networks, has agreed to recommend to its current shareholders to sell their shares to the investment group for $11.5 per share. Gilat's assets include cash and securities valued at $168 million, $37.4 million in currently restricted deposits, and its office building in Petah Tikva, worth about $60 million.

If approved in Gilat's upcoming shareholders meeting, and all the necessary regulatory approvals are received, the deal will be completed by next September, and Gilat will be delisted from Nasdaq, making management of the company easier for its new shareholders, who will then be free to implement policy without being required to make regular reports to the securities authority or shareholders.

Levinberg says that the decision comes after considering various strategic options for creating long-term value for its shareholders, which the board has been weighing for the past 11 months. Shamir's interest in taking over Gilat began three years ago, but only now has he been able to carry it though with the help of an American investment fund and friends from his former airforce days and the business sector.

Shamir bought 1.25 million shares in Gilat in 2005 with financing from Bank Hapoalim (10% of the firm's equity at the time), and now 5.6%, for $7.9 million, at $6.3 per share.

But Shamir was forced to play second fiddle to the U.S. York Fund, which had acquired a 42% share in the company before it finally sold off about a third of its holding in a December 2006 issue, at $8.5 per share.

Last year Shamir managed to gather a group of U.S. and Israeli investors, which in addition to his old friends from the airforce, include VeriFone chairman and CEO Douglas Bergeron and a private equity fund Gores Group.

Shamir's initial offer for a full buyout was for $10 per share, before agreeing to $10.5 and even $11.6 per share as negotiations progressed with Gilat's board. The falling stock market in 2008 was instrumental in getting Shamir a 2% discount.

Sources close to the deal say that negotiations between the various parties were fairly lengthy because of the relatively large number of investors involved, and Gilat's interest in considering the optimum strategy for its shareholders.

Gilat also considered offers from its big competitor, Hughes Communications, as well as ViaSat of California, which is also active in the satellite communications equipment area. Although concerns over exposure of its technology secrets before negotiations were completed led the firm to withdraw from these options, Gilat was able to leverage the offers in haggling with Shamir's investment group.

Gilat, which faced bankruptcy following huge losses and enormous debts to the banks in the burst of the high-tech bubble at the beginning of this decade, has been propelled over the past three years by a new, strong surge of broadband infrastructure development and improvement in both developed and developing countries.

Strong demand for its products are coming from telecom operators, communication service suppliers, large organizations and government agencies. The company has a strong presence in Eastern Asia, India, Africa, Latin America and Russia. Shamir, who together with Apax Partners recently bought Tnuva, said that Gilat is an excellent company that has yet to realize its potential.