Acquisition by Communications & Power Industries for approximately $175 million subject to CPI’s sale of its own geostationary satellite antenna business.
Communications & Power Industries LLC (CPI), a global manufacturer of electronic components and subsystems for the communications and defense markets, has received conditional approval from the Department of Justice Antitrust Division to proceed with its proposed acquisition of SATCOM Technologies, the antenna systems business of General Dynamics Mission Systems, Inc. The Antitrust Division announced that it will require the divestiture of CPI’s wholly-owned subsidiary, CPI ASC Signal Division Inc. (ASC Signal), under the terms of a proposed consent decree, which would settle allegations made in a civil suit that the merger, as originally structured, would substantially lessen competition for the sale of large geostationary satellite antennas in the United States (U.S. v. Odyssey Investment Partners Fund V, LP, Case No. 1:20-cv-01416).
According to the government’s complaint filed today in the federal district court in Washington, D.C., the proposed acquisition of General Dynamics SATCOM Technologies, Inc. (GD SATCOM), a subsidiary of General Dynamics, by CPI, a portfolio company of private equity fund Odyssey Investment Partners Fund V, LP, would substantially lessen competition in the design, manufacture, and sale of large geostationary satellite antennas in the United States. CPI, through its subsidiary ASC Signal, and GD SATCOM are the only two significant suppliers that design, manufacture, and sell large geostationary satellite antennas in the United States, the government alleged. As a result, without the divestiture, the merger would allegedly give the combined firm an effective monopoly, leaving customers, including the Department of Defense, without a meaningful competitive alternative for this critical component of satellite communications network. According to the government, large geostationary satellite antennas are a key component of communications networks utilized by the Defense Department, as well as commercial customers, such as broadband internet suppliers, in areas that lack access to the main telecommunications grid.
Under the terms of the proposed consent decree, Odyssey, CPI, and General Dynamics would be required to divest the entirety of CPI’s ASC Signal subsidiary, including its facilities in Texas and Ontario, Canada, as well as other assets related to large geostationary satellite antennas. Odyssey and CPI also would be required to provide advance notification to the government before directly or indirectly acquiring any assets of or any interest in an entity involved in the design, manufacture, and sale of large ground station antennas for geostationary satellites. The consent decree is subject to court approval.
CPI announced the acquisition in August 2019. At that time, CPI had anticipated that the deal would close before the end of calendar year 2019.
Attorneys: Jay D. Owen, U.S. Department of Justice, for the United States. Kenneth B. Schwartz (Skadden, Arps, Slate, Meagher & Flom LLP) for Odyssey Investment Partners Fund V, LP and Communications & Power Industries LLC. Bruce McCulloch (Freshfields Bruckhaus Deringer LLP) for General Dynamics Corp.
Companies: Odyssey Investment Partners Fund V, LP; Communications & Power Industries LLC; General Dynamics Corp.
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