Independent Proxy Advisory Firm ISS Recognizes the Need for Board Change at Ceragon to Ensure a "More Fulsome Evaluation of Strategic Alternatives"
ISS calls out the Ceragon Board's passive approach and that "lack of clear progress" could send CRNT stock lower in the absence of a transaction
Aviat urges shareholders to vote on the GOLD proxy card for ALL FIVE Aviat nominees to elect directors who will support near- and long-term value creation at
"We are pleased that ISS recognizes the need for boardroom change at
- "In general, CRNT underperformed peers and the Nasdaq index over all measurement periods ended on the unaffected date. Over the one-year period through the unaffected date, CRNT's TSR was 7.8 percent below the TSR of the selected peers. Extending the TSR analysis over a period of three and five years, we observe that the gap widens. More precisely, over the three-year and five-year periods through the unaffected date, CRNT's TSR was 33.8 percent and 45.6 percent, respectively, below the TSR of the peer group ... While revenue growth deceleration has also been an issue at peers, the company' gross margins are below pre-pandemic levels and have not shown signs of recovery over the past several quarters."
- "Fundamental data on bookings and backlog is rather unstable to support the notion of a turnaround in fortunes at this point."
- "Over the last three years to the unaffected date,
Ceragonhas traded at a discount to the peer group. During this period, CRNT traded at a median 0.7x EV/NTM sales versus the peer group's 1.3x. This translates to a median discount of approximately 44 percent over the same period. The revised acquisition consideration implies an EV/ NTM sales multiple of 0.84x versus 0.77x initially offered. The revised offer represents a 20-percent premium over the historical multiple. Similarly, using the peer group current multiple, applying the typical 44 percent discount, and using CRNT's forward sales, we estimate a theoretical standalone value of USD 2.44per share, to which the new offer represents a 26.3 percent premium. The CRNT stock was already in a downturn and lack of clear progress could, in any event, send the stock lower in the short term in the absence of a transaction."
In its report, ISS critiqued the Board's refusal to engage in negotiations with Aviat regarding a potential transaction, and its generally passive approach to maximizing shareholder value.
- "It is questionable to what extent the board has been open to negotiating a deal; the board was apparently more concerned with issues that would be secondary to price, like firm financing commitment or a high level of breakup fees. One would typically discuss price and type of consideration, which would lead to financing needs, financing commitments, level of breakup fees and the like."
- "The company's statement that is 'willing to transact with Aviat or any other party that delivers full, fair and certain value to our shareholders' appears to imply the board sitting passively, expecting a bidder to come with the perfect offer without prior discussions."
- "The target board does not appear to have engaged in detailed discussions, and, leaving aside the potential for a deal, does not appear to inspire confidence in investors in addressing the strategic challenges the company faces. The apparent standalone execution risks and governance concerns lead to the conclusion that some board change is warranted to ensure a more fulsome evaluation of strategic alternatives."
In its report, ISS also questioned the independence of certain board members from
- "Chairman and co-founder Zisapel sold approximately one-third of his CRNT shares at approx.
USD 5.40per share in early 2021 though did not reinvest the proceeds at prices below USD 2.00per share in early 2022."
Yael Langer, who has a 20-year tenure on the board and has been involved in a multitude of RAD group companies, and Ira Palti, the 16-year former CEO of the company, would send a strong message regarding the need to appoint strong, independent board members that could bring a fresh view to the company's challenges."
- "The targeted directors are (or were for a long time) related to the RAD group and investors may question to what extent they would challenge the company's chairman/co-founder; the founder and the three directors represent a majority of the board."
YOUR VOTE IS CRUCIAL. For further information on how your vote FOR ALL FIVE Aviat's director nominees can maximize shareholder value, please visit ValueForCeragon.com.
About Aviat Networks, Inc.
The information contained in this document includes forward-looking statements within the meaning of the safe harbor provisions of the
- the impact of COVID-19 on our business, operations and cash flows;
- continued price and margin erosion as a result of increased competition in the microwave transmission industry;
- our ability to realize the anticipated benefits of any proposed or recent acquisitions, including our proposed transaction with
Ceragon, within the anticipated timeframe or at all, including the risk that proposed or recent acquisitions will not be integrated successfully;
- the results of the extraordinary general meeting of
- the impact of the volume, timing, and customer, product, and geographic mix of our product orders;
- the timing of our receipt of payment for products or services from our customers;
- our ability to meet projected new product development dates or anticipated cost reductions of new products;
- our suppliers' inability to perform and deliver on time as a result of their financial condition, component shortages, the effects of COVID-19 or other supply chain constraints;
- the effects of inflation and the timing and extent of changes in the prices and overall demand for and availability of our inputs;
- customer acceptance of new products;
- the ability of our subcontractors to timely perform;
- weakness in the global economy affecting customer spending;
- retention of our key personnel;
- our ability to manage and maintain key customer relationships;
- uncertain economic conditions in the telecommunications sector combined with operator and supplier consolidation;
- our failure to protect our Intellectual property rights or defend against Intellectual property infringement claims by others;
- the results of our restructuring efforts;
- the ability to preserve and use our net operating loss carryforwards;
- the effects of currency and interest rate risks;
- the effects of current and future government regulations, including the effects of current restrictions on various commercial and economic activities in response to the COVID-19 pandemic;
- general economic conditions, including uncertainty regarding the timing, pace and extent of an economic recovery in the United States and other countries where we conduct business;
- the conduct of unethical business practices in developing countries;
- the impact of political turmoil in countries where we have significant business;
- the impact of tariffs, the adoption of trade restrictions affecting our products or suppliers, a United States withdrawal from or significant renegotiation of trade agreements, the occurrence of trade wars, the closing of border crossings, and other changes in trade regulations or relationships; and
- Aviat's ability to implement our stock repurchase program or the extent to which it enhances long-term stockholder value.
For more information regarding the risks and uncertainties for Aviat's business, see "Risk Factors" in Aviat's Annual Report on Form 10-K filed with the
This document does not constitute an offer to sell or exchange, or the solicitation of an offer to buy or exchange, any securities, nor will there be any sale of securities in any states or jurisdictions in which such offer or sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities will be made except by means of a prospectus meeting the requirements of section 10 of the Securities Act of 1933 or an exemption therefrom.
In connection with any transaction between Aviat and
1 Permission to use quotations from ISS was neither sought nor obtained. Emphasis added.
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