Comtech scraps plan to buy CPI International

CALIFORNIA: Telecom equipment maker Comtech Telecommunications said it has dropped plans to buy smaller rival CPI International Inc for $472.3 million, which would have been its largest acquisition ever, sending its shares up 5 percent in extended trade.

The acquisition of CPI, which makes microwave and radio frequency products, would have almost tripled Comtech's RF microwave amplifier segment, which makes products used in radar jammers, air-to-ground satellite communications and a variety of other applications.

Comtech, which competes with E2V Technologies Ltd, Miteq Inc, Herley Industries Inc, Aethercomm and Empower RF Systems in the RF microwave amplifiers segment, received $15 million from CPI as termination fee, the company said in a statement.

In May, Comtech Telecommunicationssaid it agreed to buy the Palo Alto, California-based CPI International in a cash-and-stock deal.

Comtech, which had been in discussions to buy CPI for the last three years, said the talks were ended by mutual agreement.

Shares of Melville, New York-based Comtech have lost almost a third of their value since May 10, when it made a bid for CPI.

CPI shares, which closed at $14.12, Tuesday on Nasdaq -- 14 percent below Comtech's bid price -- were down 8 percent in extended trade. They have fallen 14 percent since it received the Comtech offer in May.