EXCLUSIVE-Acacia Research seeks to acquire Comtech Telecommunications-sources

Band Svea Herbst-Bayliss

November 1 (Reuters)Acacia Research Corp. ACTGO.Owhich buys companies in sectors such as technology and healthcare, has made an offer to acquire Comtech Telecommunications Corp CMTL.Oa provider of wireless communications systems for police and other emergency services, for $790 million in cash, people familiar with the offer said.

The offer comes as Comtech faces pressure from one of its shareholders, Outerbridge Capital Management LLC, to explore a sale of the entire company. Comtech angered Outerbridge last month by announcing an agreement to sell a $100 million stake in a PIPE deal to hedge funds Magnetar Capital LLC and White Hat Capital Partners LP.

Acacia, which is backed by activist hedge fund Starboard Value, offered Comtech $30 per share in cash, the sources said, a 39% premium to Comtech’s stock closing price on Friday. There is no certainty that Comtech will enter into negotiations or that a deal will be reached, the sources added, requesting anonymity because the matter is confidential.

Comtech did not immediately respond to a request for comment.

Acacia agreed with Starboard two years ago that the hedge fund would provide up to $400 million in capital for strategic investments and acquisitions. Acacia is led by private equity and hedge fund veteran Clifford Press.

Outerbridge challenged Comtech by appointing three directors to the company’s five-member board. Comtech shareholders will elect board members at the company’s annual meeting in December.

Comtech announced last month that its chief executive Fred Kornberg would be replaced by its president and chief executive Michael Porcelain. Outerbridge criticized the move, saying Porcelain contributed to the poor performance of Comtech shares. Outerbridge also said the stake sale agreed last month carried no premium and was costly and dilutive for Comtech shareholders.

(Reporting by Svea Herbst-Bayliss in Boston; editing by Richard Pullin)

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