Deal for Israeli Satellite Company Fails to Launch

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The acquisition of an Israeli satellite company by a Los Angeles-based investment group has become bogged down in a contentious spat.

As late as July, it looked like Galactic Holdings Ltd., a group of investors spearheaded by Los Angeles-based Gores Group, was on its way to acquiring Gilat Satellite Networks Ltd.

An acquisition agreement was struck in late March. In early July, 99 percent of Gilat’s shareholders approved the $475 million all-cash transaction, which valued Gilat’s Nasdaq shares at about $11.40.

But things appeared to head south around the end of August. On Aug. 25, Gilat told the investors they were in breach of the acquisition agreement by adding conditions that were “substantially different from the definitive agreement,” according to a press release from Gilat. Four days later, Gilat called off the deal.

Galactic fired back with a statement claiming that Gilat was in breach, citing Gilat’s operating performance. Gilat has reported its second quarter revenue and income were down from the previous year.

The company blamed difficulties it has had with providing cell phone service to remote areas of Columbia for the downturn.

Terry Fahn, a spokesman for Galactic, declined to comment. A representative of Gilat could not be reached.

The acquisition agreement called for a $47.3 million termination fee to be paid to Gilat by Sept. 10, a fee that Galactic has not paid.

If the acquisition falls through, it would nullify the raison d’etre of Galactic, which the Gores Group formed with a group of Israeli investors for the sole purpose of acquiring Gilat.

Meanwhile, Gilat’s share price, which peaked this year at just over $11 in early August, plunged to under $6 last week.


Smart Search

Depending on what word you type into an Internet search engine, you can get a range of results. One man’s rat could be a rodent and another man’s rat could be a traitor.

Now, Cognition Technologies Inc., a Culver City firm, thinks it has a solution. This month, it introduced what it calls the largest semantic map of the English language for computers.

The new technology allows computers to understand more than 536,000 word and phrase meanings and 75,000 concept classes, which help to find synonyms for words.

In practical terms, that means better searches for people using Cognition’s technology. For example, if you search “bats in caves,” the software will be able to ascertain based on the context of the words that you are interested in the furry winged mammal, said Scott Jarus, the company’s chief executive.

“Our technology allows computers to be aware of language, to understand language,” Jarus said.

Besides Internet search engines, Cognition’s technology can also be used by Web advertisers who want to better match ads with potential customers, electronic translation services and lawyers using e-discovery, Jarus said.

Cognition has received funding from Draper Associates, Fingerhut Ventures and Tech Coast Angels. In July, it received $2.7 million in financing primarily from Draper and Fingerhut. Jarus also put in some of his own money.


Scanner Sale

A sale of portable fingerprint scanning devices that will be used by the Sheriff’s Department could turn other law enforcement agencies into potential customers for a Pasadena-based technology company.

Cogent Systems Inc., which manufactures identification systems, announced last week that Los Angeles County Regional Identification System had ordered 1,000 of Cogent’s BlueCheck mobile identification devices. The Bluetooth-enabled devices weigh 3 ounces and allow law enforcement officers to scan a suspect’s fingerprints and then access the federal fingerprint database from a BlackBerry, PDA or the computer of their patrol car.

Financial terms of the deal were not disclosed. But Jeremy Grant, an analyst with the Stanford Group Co., said he’d be surprised if it amounted to more than $2 million in revenue for Cogent.

That might not seem like much for a company expected to do about $125 million in business this year. But Grant said the real benefit would come from the company being able to use the Sheriff’s Department as a selling point as it hawks BlueCheck to other customers.

“L.A. County has really been out front in use of these devices, and it’s a great reference for Cogent that will help them sell other places,” Grant said. “Hand-held biometric devices are a huge market right now.”

The L.A. County Sherriff’s Department already uses about 500 of the BlueCheck devices, according to Cogent.


Staff reporter Charles Proctor can be reached at [email protected] or at (323) 549-5225 ext. 230.

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