SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
(Amendment No. )*
CERAGON NETWORKS LTD.
(Name of Issuer)
(Name of Issuer)
Ordinary Shares, par value NIS 0.01 per share
(Title of Class of Securities)
(Title of Class of Securities)
M22013102
(CUSIP Number)
(CUSIP Number)
Nitzba City, Plot 300, Bldg. A, 7th floor, POB 112, Rosh Ha’Ayin4810002, Israel
Tel: (+972 ) 3-543-1643
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
With a copy to
Michael Gibson, Katherine Frank, and Stephen Gill
Vinson & Elkins LLP
200 West 6th Street, Suite 2500
Austin, TX 78701
512-542-8400
June 24, 2022
(Date of Event which Requires Filing of this Statement)
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box: ☐
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
(Continued on following pages)
CUSIP No. M22013102
| 1 | NAME OF REPORTING PERSON: Aviat Networks, Inc. | |||||||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) (b) ◻ | |||||||
| 3 | SEC USE ONLY: | |||||||
| 4 | SOURCE OF FUNDS: WC | |||||||
| 5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e): ◻ | |||||||
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware | |||||||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: | 7 | SOLE VOTING POWER: 4,233,757 | ||||||
| 8 | SHARED VOTING POWER: 0 | |||||||
| 9 | SOLE DISPOSITIVE POWER: 4,233,757 | |||||||
| 10 | SHARED DISPOSITIVE POWER: 0 | |||||||
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 4,233,757 | |||||||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: | ¨ | ||||||
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 5% (1) | |||||||
| 14 | TYPE OF REPORTING PERSON: CO | |||||||
(1) Based on 84,001,666 Ordinary Shares (as defined herein), issued and outstanding as of March 27, 2022, as disclosed on the Annual Report on Form 20-F filed by the Issuer (as defined herein) filed with the SEC on May 2, 2022.
CUSIP No. M22013102
| 1 | NAME OF REPORTING PERSON: Weinstock Legacy, LLC | |||||||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) (b) ◻ | |||||||
| 3 | SEC USE ONLY: | |||||||
| 4 | SOURCE OF FUNDS: WC | |||||||
| 5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e): ◻ | |||||||
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION: Texas | |||||||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: | 7 | SOLE VOTING POWER: 0 | ||||||
| 8 | SHARED VOTING POWER: 10,000* | |||||||
| 9 | SOLE DISPOSITIVE POWER: 0 | |||||||
| 10 | SHARED DISPOSITIVE POWER: 10,000* | |||||||
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 10,000 | |||||||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: | ¨ | ||||||
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 0.01% (1) | |||||||
| 14 | TYPE OF REPORTING PERSON: OO | |||||||
*Consists of shares owned by Weinstock Legacy, LLC
(1) Based on 84,001,666 Ordinary Shares (as defined herein), issued and outstanding as of March 27, 2022, as disclosed on the Annual Report on Form 20-F filed by the Issuer (as defined herein) filed with the SEC on May 2, 2022.
CUSIP No. M22013102
| 1 | NAME OF REPORTING PERSON: Craig Weinstock | |||||||
| 2 | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) (b) ◻ | |||||||
| 3 | SEC USE ONLY: | |||||||
| 4 | SOURCE OF FUNDS: PF, AF | |||||||
| 5 | CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e): ◻ | |||||||
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION: United States | |||||||
| NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH: | 7 | SOLE VOTING POWER: 0 | ||||||
| 8 | SHARED VOTING POWER: 10,000* | |||||||
| 9 | SOLE DISPOSITIVE POWER: 0 | |||||||
| 10 | SHARED DISPOSITIVE POWER: 10,000* | |||||||
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 10,000 | |||||||
| 12 | CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES: | ¨ | ||||||
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 0.01% (1) | |||||||
| 14 | TYPE OF REPORTING PERSON: IN | |||||||
*Consists of shares owned by Weinstock Legacy, LLC
(1) Based on 84,001,666 Ordinary Shares (as defined herein), issued and outstanding as of March 27, 2022, as disclosed on the Annual Report on Form 20-F filed by the Issuer (as defined herein) filed with the SEC on May 2, 2022.
Item 1. Security and Issuer.
The securities covered by this Schedule 13D are ordinary shares, par value NIS 0.01 per share (the “Ordinary Shares”), of Ceragon Networks, Ltd., an Israel corporation (the “Issuer”). The Issuer’s address is Nitzba City, Plot 300, Bldg. A, 7th floor, POB 112, Rosh Ha’Ayin 4810002, Israel.
Item 2. Identity and Background.
(a) This Schedule 13D is being filed by Aviat Networks, Inc., a Delaware corporation (“Aviat”), and Weinstock Legacy, LLC (“Weinstock Legacy”) and Craig Weinstock (“Mr. Weinstock”), a nominee for the Board of Directors of the Issuer (each a “Reporting Person” and, collectively, the “Reporting Persons”). The name, residence or principal business address, citizenship and present principal occupation of each manager, director and executive officer of each Reporting Person (each, a “Listed Person”) is listed on Schedule I hereto.
(b) The principal business address for Aviat is 200 Parker Dr. Ste. 100A, Austin, Texas 78728 and for Weinstock Legacy and Mr. Weinstock is 647 Electra Dr., Houston, TX, 77079.
(c) Aviat is primarily engaged in the business of designing, manufacturing and selling of wireless networking products, solutions and services. Weinstock Legacy is primarly engaged in investing in securities. The principal occupation of Mr. Weinstock is serving as the Senior Vice President and General Counsel of National Oilwell Varco, a provider of oilfield equipment and technologies.
(d)-(e) During the last five years, none of the Reporting Persons or, to the knowledge of the Reporting Persons, any of the Listed Persons has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding is or was subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.
(f) Aviat is a corporation formed under the laws of the State of Delaware. Weinstock Legacy is a limited liability company formed under the laws of the State of Texas and Mr. Weinstock is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
To date, the source of funding for the purchase of the Ordinary Shares by Aviat was the general working capital of Aviat. The Ordinary Shares beneficially owned by Weinstock Legacy and Mr. Weinstock were acquired with the general working capital of Weinstock Legacy and personal funds of Mr. Weinstock. The total cost for purchasing the Ordinary Shares reported as owned by Aviat, including brokerage commissions, was approximately $7,919,079.04. The total cost for purchasing the Ordinary Shares reported as owned by Weinstock Legacy and Mr. Weinstock, including brokerage commissions, was approximately $16,605
The information in Items 4 and 5 are incorporated by reference into this Item 3.
Item 4. Purpose of Transaction.
Aviat believes the Issuer is significantly undervalued and intends to take action to increase shareholder value. Such actions include the removal of board members of the Issuer and the election of independent directors to such vacancies.
On June 27, 2022, Aviat determined to seek member support to demand that the Issuer convene a meeting of members of the Issuer (the “Special Meeting”). Under the Issuer’s Articles of Association, a special general meeting of members of the Issuer shall be convened upon the written request of members holding more than 5% of the votes of the outstanding voting Shares in the Issuer. If a sufficient number of members support Aviat’s efforts to call the Special Meeting, Aviat intends to solicit member support in favor of proposals seeking to (i) increase the size of the Board of Directors to nine, (ii) remove Ira Palti, Yael Langer, David Ripstein, (and any new director(s) appointed by the Board of Directors since the conclusion of the 2021 Annual General Meeting of Shareholders) as directors of the Issuer and (iii) appoint Michelle R. Clayman, Paul Delson, Jonathan F. Foster, Dennis R. Sadlowski and Craig Weinstock (collectively, the “Nominees”) as directors of the Issuer.
On June 27, 2022, Aviat issued a letter to shareholders of the Issuer seeking support to convene the Special Meeting (the “Letter”). A copy of the letter is attached hereto as Exhibit A and is incorporated by reference herein. As further outlined in the Letter, on June 2, 2022, Aviat delivered a non-binding proposal (the “Proposal”) to acquire all of the outstanding Ordinary Shares of the Issuer not owned by Aviat for all cash valuing the Ordinary Shares at $2.80 per share (the “Proposed Transaction”). This represents a 43% premium over the closing price of the Ordinary Shares on February 14, 2022, the trading day before Aviat began investing in the Issuer, and a 34% premium over the closing price of the Ordinary Shares on June 27, 2022, the trading day Aviat’s investment in the Issuer was publicly announced.
The Proposal is non-binding and, once structured and agreed upon, would be conditioned upon among other things, the (i) receipt of any required governmental approvals; (ii) confirmatory legal, business, regulatory, accounting and tax due diligence; (iii) the negotiation and execution of definitive agreements providing for the Proposed Transaction; and (iv) completion of anticipated financing.
There can be no assurance that a definitive agreement with respect to the Proposal will be executed or, if executed, whether the transaction will be consummated. There is also no certainty as to whether, or when, the Issuer may respond to the Letter, or as to the timetable for execution of any definitive agreement. Aviat reserves the right to withdraw the Proposal or modify the terms at any time including with respect to the amount or form of consideration. Aviat may, directly or indirectly, take such additional steps as they may deem appropriate to further the Proposal.
If the Proposed Transaction is completed, the Ordinary Shares would become eligible for termination of its registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended, and would be delisted from the Nasdaq.
The foregoing description is qualified in its entirety by reference to the full text of the Letter, a copy of which is attached hereto as Exhibit A and is incorporated herein by reference.
Neither the Letter nor this Schedule 13D is meant to be, nor should be construed as, an offer to buy or the solicitation of an offer to sell any of the Issuer’s securities.
Aviat also intends to advocate for a strategic review of the Issuer’s assets, including potential divestitures and outright sale of the Issuer, and develop a capital allocation strategy that maximizes the long-term value for all shareholders.
Depending upon overall market conditions, other investment opportunities available to the Reporting Persons, and the availability of Ordinary Shares at prices that would make the purchase or sale of Shares desirable, the Reporting Persons may endeavor to increase or decrease their position in the Issuer through, among other things, the purchase or sale of Ordinary Shares on the open market or in private transactions, on such terms and at such times as the Reporting Persons may deem advisable from time to time and at any time.
The Reporting Persons do not have any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) - (j) of Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with completion of, or following, any of the actions discussed herein. The Reporting Persons intend to review its investment in the Issuer on a continuing basis and to communicate with the Issuer’s management and Board about a broad range of operational and strategic matters. Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the Ordinary Shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, engaging in communications with management and the Board of the Issuer, engaging in discussions with members of the Issuer or third parties about the Issuer and the Reporting Persons’ investment, making proposals to the Issuer concerning changes to the capital allocation strategy, capitalization, ownership structure, including a sale of the Issuer as a whole or in parts as a means of enhancing value, Board structure (including Board composition) or operations of the Issuer, purchasing additional Ordinary Shares, selling some or all of its Ordinary Shares, engaging in short selling of or any hedging or similar transaction with respect to the Ordinary Shares, or changing its intention with respect to any and all matters referred to in Item 4.
Item 5. Interest in Securities of the Issuer.
(a, b) The response of the Reporting Persons to rows 7 through 13 on the cover page of this Schedule 13D are incorporated by reference herein. By virtue of his relationship with Weinstock Legacy, Mr. Weinstock may be deemed to beneficially own the Ordinary Shares owned by Weinstock Legacy. To the Reporting Persons’ knowledge, no Listed Person beneficially owns any Ordinary Shares except as set forth in Schedule I hereto.
(c) Schedule II sets forth the transactions in the Ordinary Shares effected by the Reporting Persons during the past 60 days. To the Reporting Persons’ knowledge, no Listed Person has effected any transaction in the Ordinary Shares during the past 60 days.
(d) Except as set forth in this Item 5, no person other than each respective record owner of securities referred to herein is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the securities discussed herein.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.
On June 22, 2022, Aviat received from each Nominee a signed letter indicating each Nominee’s consent to being named in the Issuer’s proxy statement as a nominee director, consent to serve as director of the Issuer if nominated, and consent to the ethical and other duties applicable to such nomination. To Aviat’s knowledge, no Nominee (other than Mr. Weinstock) beneficially owns any Ordinary Shares.
On June 25, 2022, the Reporting Persons entered into a Joint Filing Agreement in which the Reporting Persons agreed to the joint filing on behalf of each of them of statements on Schedule 13D with respect to securities of the Issuer, to the extent required by applicable law. A copy of this agreement is attached as Exhibit B hereto and is incorporated herein by reference.
Except as described above, there are no other contracts, arrangements, understandings or relationships (legal or otherwise) including, but not limited to, transfer or voting of any of the securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies, among the Reporting Persons and any other person, with respect to any securities of the Issuer, including any securities pledged or otherwise subject to a contingency the occurrence of which would give another person voting power or investment power over such securities.
The information in Items 3 and 4 are incorporated by reference into this Item 6.
Item 7. Material to be filed as Exhibits
Exhibit A June 28, 2022 Letter issued to Issuer’s Chairman of the Board and Chief Executive Officer seeking to convene the Special Meeting and disclosing Aviat’s previous non-binding proposal.
Exhibit B Joint Filing and Solicitation Agreement, dated June 25, 2022, by and among Aviat Networks, Inc., Weinstock Legacy, LLC and Craig Weinstock.
[CUSIP NO.M22013102]
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Dated: June 27, 2022
| Aviat Networks, Inc. | |||||||||||
| By: | /s/ Pete Smith | ||||||||||
| Name: | Pete Smith | ||||||||||
| Title: | President and Chief Executive Officer | ||||||||||
Weinstock Legacy, LLC | |||||||||||
| By: | /s/ Craig Weinstock | ||||||||||
| Name: | Craig Weinstock | ||||||||||
| Title: | President | ||||||||||
/s/ Craig Weinstock | |||||||||||
| Name: Craig Weinstock | |||||||||||
SCHEDULE I
Aviat Networks, Inc.
The name, function, citizenship and present principal occupation or employment of each for the directors and executive officers of Aviat Networks, Inc. are set forth below. Unless otherwise indicated below, (i) each occupation set forth opposite the individuals name refers to employment with Aviat Networks, Inc. and (ii) the business address of each director and executive officer listed below is 200 Parker Drive, Suite C100A, Austin, TX 78728.
| Name | Position with Reporting Person | Principal Occupation/Business; Business Address | Citizenship | No. Shares Held | ||||||||||||||||||||||||||||
Pete Smith | Chief Executive Officer, Director | Chief Executive Officer | USA | |||||||||||||||||||||||||||||
David Gray | Chief Financial Officer | Chief Financial Officer | USA | |||||||||||||||||||||||||||||
Bryan Tucker | Senior Vice President Sales & Services - Americas | Senior Vice President Sales & Services - Americas | USA | |||||||||||||||||||||||||||||
Erin Boase | General Counsel, Vice President Legal Affairs | General Counsel, Vice President Legal Affairs | USA | |||||||||||||||||||||||||||||
Gary Croke | Vice President Marketing & Product Line Management | Vice President Marketing & Product Line Management | USA | |||||||||||||||||||||||||||||
John Mutch | Chairman of the Board, Director1 | Founder of MV Advisors LLC | USA | |||||||||||||||||||||||||||||
Bryan Ingram | Director | Former senior vice president and general manager of Broadcom’s Wireless Semiconductor Division | USA | |||||||||||||||||||||||||||||
Michele Klein | Director | Chief Executive Officer of Jasper Ridge Inc. | USA | |||||||||||||||||||||||||||||
Somesh Singh | Director | Former chief product officer of Exploration & Production Software at Emerson Electric | USA | |||||||||||||||||||||||||||||
James Stoffel | Director | Retired co-founding General Partner of Trillium International, LLC | USA | |||||||||||||||||||||||||||||
Bruce Taten | Director | Former as Senior Vice President, General Counsel and Chief Compliance Officer for Cooper Industries | USA | |||||||||||||||||||||||||||||
Weinstock Legacy, LLC
The name, function, citizenship and present principal occupation or employment of each for the managers and executive officers of Weinstock Legacy, LLC are set forth below. The business address of each manager and executive officer listed below is 647 Electra Dr., Houston, TX, 77079.
| Name | Position with Reporting Person | Principal Occupation/Business; Business Address | Citizenship | No. Shares Held | ||||||||||||||||||||||||||||||||||
Craig Weinstock | Manager, President | Senior Vice President and General Counsel of National Oilwell Varco | USA | 10,000* | ||||||||||||||||||||||||||||||||||
* Consists of shares owned by Weinstock Legacy, LLC
SCHEDULE II
The following table lists all transactions completed by each Reporting Person in the Ordinary Shares since April 25, 2022. Each of the following transactions were open market transactions.
| Aviat Networks, Inc. | ||||||||
| Date | Shares bought | Price | ||||||
| 4/25/22 | 44,000 | $1.9133 | ||||||
| 4/26/22 | 50,000 | $1.8340 | ||||||
| 4/27/22 | 44,000 | $1.8392 | ||||||
| 4/28/22 | 44,000 | $1.8870 | ||||||
| 4/29/22 | 44,000 | $1.9237 | ||||||
| 5/2/22 | 44,000 | $1.8817 | ||||||
| 5/3/22 | 44,000 | $1.9337 | ||||||
| 5/4/22 | 44,000 | $1.9703 | ||||||
| 5/5/22 | 48,000 | $1.9662 | ||||||
| 5/6/22 | 48,000 | $1.9350 | ||||||
| 5/9/22 | 55,000 | $1.8146 | ||||||
| 5/10/22 | 60,000 | $1.7465 | ||||||
| 5/11/22 | 60,000 | $1.6566 | ||||||
| 5/12/22 | 60,000 | $1.5712 | ||||||
| 5/13/22 | 48,000 | $1.6765 | ||||||
| 5/16/22 | 55,000 | $1.7104 | ||||||
| 5/17/22 | 55,000 | $1.7779 | ||||||
| 5/18/22 | 10,000 | $1.6987 | ||||||
| 5/19/22 | 55,000 | $1.7040 | ||||||
| 5/20/22 | 62,500 | $1.6807 | ||||||
| 5/23/22 | 55,000 | $1.7315 | ||||||
| 5/24/22 | 70,000 | $1.6032 | ||||||
| 5/25/22 | 60,000 | $1.6141 | ||||||
| 5/26/22 | 65,000 | $1.7398 | ||||||
| 5/27/22 | 55,000 | $1.7949 | ||||||
| 5/31/2022 | 55,000 | $1.7797 | ||||||
| 6/1/2022 | 55,000 | $1.8900 | ||||||
| 6/2/2022 | 55,000 | $1.8249 | ||||||
| 6/3/2022 | 55,000 | $1.8107 | ||||||
| 6/6/2022 | 55,000 | $1.8143 | ||||||
| 6/7/2022 | 55,000 | $1.8146 | ||||||
| 6/8/2022 | 55,000 | $1.9266 | ||||||
| 6/9/2022 | 55,000 | $1.9009 | ||||||
| 6/10/2022 | 70,000 | $1.7533 | ||||||
| 6/13/2022 | 80,000 | $1.5852 | ||||||
| 6/14/2022 | 80,000 | $1.5897 | ||||||
| 6/15/2022 | 70,000 | $1.6750 | ||||||
| 6/16/2022 | 70,000 | $1.7342 | ||||||
| 6/17/2022 | 55,000 | $1.8735 | ||||||
| 6/21/2022 | 55,000 | $1.9647 | ||||||
| 6/22/2022 | 55,000 | $2.0119 | ||||||
| 6/23/2022 | 55,000 | $2.1276 | ||||||
| 6/24/2022 | 55,000 | $2.2288 | ||||||
| Weinstock Legacy, LLC | ||||||||
| Date | Shares bought | Price | ||||||
| 5/20/22 | 1,000 | 1.65 | ||||||
| 5/20/22 | 1,000 | 1.655 | ||||||
| 5/24/22 | 1,000 | 1.60 | ||||||
| 5/25/22 | 2,000 | 1.60 | ||||||
| 6/13/22 | 5,000 | 1.70 | ||||||
Craig Weinstock
None.
Exhibit A
Exhibit B
Exhibit A
June 28, 2022
Mr. Zohar Zisapel, Chairman of the Board
Mr. Doron Arazi, Chief Executive Officer
Ceragon Networks Ltd.
24 Raoul Wallenberg Street, Tel-Aviv 69719, Israel
Mr. Doron Arazi, Chief Executive Officer
Ceragon Networks Ltd.
24 Raoul Wallenberg Street, Tel-Aviv 69719, Israel
Gentlemen:
As you are aware, we have sought to engage with you on numerous occasions over the past year in a constructive dialogue about Aviat acquiring all of the outstanding shares of Ceragon at a meaningful premium for Ceragon shareholders. Our Board of Directors has spent considerable time analyzing the benefits of this combination and is unanimous in its belief that such a transaction has clear strategic and financial merits and creates a compelling opportunity to deliver meaningful near- and long-term value for shareholders of both companies.
We are surprised and disappointed by your rejection of our April proposal to acquire Ceragon for $2.80 per share in cash, which represents a significant 51% premium to Ceragon’s 60-day volume-weighted average share price of $1.85 as of June 24, 2022 and a 34% premium to Ceragon shareholders based on the closing price on June 27, 2022 of $2.09. When you rejected our initial November 21, 2021 proposal to acquire Ceragon for $3.25 per share in cash, your stated view was that our proposal was inadequate and that external factors and yet-to-be-made-public internal initiatives were impacting your short-term market price. Your stock price performance in the seven and a half months since we made our initial proposal to you contradicts such a view. Indeed, here is a graph showing your stock performance since our initial offer, which shows a steady decline:
Additionally, you have consistently refused to even engage with us unless we obtained financing commitments and unless we agreed that Aviat would pay you a substantial break-up fee if we abandoned the transaction. In response, we provided you with copies of highly confident letters from three well-regarded financial institutions and agreed that we would have binding commitment letters in place prior to signing. To address your request on a break-up fee, we provided you with a detailed framework as to how the transaction would be structured, including noting that we would be willing to structure our transaction so that Aviat would pay a
Exhibit A
termination fee in the unlikely event that, despite the binding commitments, we were unable to consummate the transaction due to the failure of our financing.
Last week, our Chairman and I traveled to Israel to meet with you in person in the hopes of engaging constructively with you to find a mutually beneficial transaction. However, you refused to engage in price discussions, except to advise that you had not engaged a financial advisor, and estimated it would take you at least two months to thoroughly analyze our proposal. Rather than engaging with us, you once again insisted on fully committed financing and stated that Aviat would have to agree to pay a break-up fee if the transaction failed to close for any reason that was not Ceragon’s “fault.” You further advised that the Aviat break-up fee you were seeking should be equal to the difference between the purchase price and your current trading price, which at the time translated to an outrageous ~$60 million on a $235 million transaction, or roughly 25%. You also advised us that if Ceragon were to be presented with a superior bid, Ceragon should be permitted to terminate the agreement with Aviat without the payment of a termination fee, which is contrary to market practice in such cases. We believe your shareholders would agree that requiring such unorthodox and off-market provisions as obstacles to discussions and due diligence are not the sort of actions that fiduciaries trying to maximize shareholder value would take when being offered a 51% premium acquisition proposal.
Consequently, we are left with no choice but to take our compelling proposal directly to your shareholders by making its terms public. Given the substantial premium represented by our proposal and the unique benefits of a combination with Aviat, we are confident that Ceragon’s shareholders will enthusiastically embrace our proposal. We also want Ceragon’s shareholders to rest assured that we will have committed and binding financing prior to signing the transaction agreement and we intend for this transaction to be based on market precedents, including with respect to the parties’ respective remedies if the transaction is terminated.
We believe that a combination of our two companies would create a leading wireless transport specialist with the scale and expertise to deliver superior performance to customers and shareholders. By combining our businesses, we can further improve our supply chain sourcing, increase operational efficiency, and realize meaningful cost savings. Additionally, Ceragon’s customer base and geographic exposure is highly complementary to Aviat’s. Together, we can deliver a valuable set of technological expertise and product breadth to customers around the world.
Absent this combination, we doubt that Ceragon’s stock and business performance will meaningfully change in the near-term. Ceragon’s current product offering lacks meaningful technological differentiation, and even in areas where Ceragon does have differentiation, the company lacks the management competence to extract value. The company’s gross margin has declined from 34% in calendar year 2019 to 30% over the last twelve months. Additionally, Ceragon’s next generation chip has been delayed, and given the supply challenges in the chip space, we see no reason to believe why this product won’t continue to slip in its delivery to the market. Aviat’s next generation System on Chip (partnership with MaxLinear) is based on a newer generation of technology than Ceragon’s chip and we believe will offer significant differentiation. Ceragon’s chip development strategy is destroying value to shareholders and will offer no technological advantage to customers in the medium to long-term. Without our offer for and stewardship of Ceragon’s business, we do not expect to see significant change in the company’s stock performance nor its operating results.
Accordingly, we believe our all-cash proposal provides Ceragon shareholders with compelling, immediate and certain value, which is substantially in excess of the value that would be generated for Ceragon shareholders if Ceragon were to remain a stand-alone entity. In addition, we remain open to offering a portion of the consideration in Aviat stock should you wish to provide the opportunity for your shareholders to share in the upside potential of the combined
Exhibit A
company. We believe that Ceragon shareholders would appreciate the strategic and financial logic of the combination and the opportunity to participate in its future.
In connection with delivering this proposal, we advise you that we have acquired 4,233,757 shares of Ceragon, which represents approximately 5.04% of the outstanding shares. As a larger than 5% holder, we are requesting that Ceragon call an extraordinary general meeting of its shareholders for the purposes of increasing the size of the Ceragon board to nine, electing our proposed independent nominees to those seats, and removing and replacing three of Ceragon’s current directors with our proposed nominees. Based on your response to our proposals to date, we believe the time has come for new board leadership that would evaluate our proposal and negotiate for the best outcome for Ceragon’s shareholders.
As we have reiterated to you several times, we are committed to a transaction with Ceragon. In connection with this transaction, we have engaged Vinson & Elkins LLP and Meitar as our legal advisors, and Okapi Partners as our proxy solicitor. We stand ready to discuss next steps towards a mutually beneficial negotiated transaction with you, as well as your independent financial and legal advisors. As we have stressed throughout the last year, we very much prefer to negotiate a transaction with Ceragon on a friendly basis, whether with you or with a revised board, but are prepared to take all steps necessary to pursue this transaction on an expedited basis.
Sincerely,
Aviat Networks
President and Chief Executive Officer
President and Chief Executive Officer
Exhibit B
JOINT FILING AND SOLICITATION AGREEMENT
WHEREAS, certain of the undersigned are stockholders, direct or beneficial, of Ceragon Networks, Ltd., an Israeli corporation (the “Company”);
WHEREAS, Aviat Networks, Inc., a Delaware corporation (“Aviat”), Weinstock Legacy, LLC and Craig Weinstock wish to form a group for the purpose of seeking representation on the Company’s Board of Directors (the “Board”) at an extraordinary general meeting of the shareholders of the Company (including any adjournments, postponements, reschedulings or continuations thereof, the “Meeting”) and for the purpose of taking all other action necessary to achieve the foregoing.
NOW, IT IS AGREED, this 25th day of June 2022 by the parties hereto:
1. In accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), each of the undersigned (collectively, the “Group”) agrees to the joint filing on behalf of each of them of statements on Schedule 13D, and any amendments thereto, with respect to the securities of the Company. Each member of the Group shall be responsible for the accuracy and completeness of his, her or its own disclosure therein, and is not responsible for the accuracy and completeness of the information concerning the other members, unless such member knows that such information is inaccurate. Aviat or its representative shall provide each member of the Group with copies of all Schedule 13D filings and other public filings to be filed on behalf of such member as soon as practicable prior to the filing or submission thereof.
2. So long as this Agreement is in effect, each of the undersigned shall provide written notice to Erin Boase, General Counsel and VP of Legal Affairs of Aviat of (i) any of their purchases or sales of securities of the Company, or (ii) any securities of the Company over which they acquire or dispose of beneficial ownership. Notice shall be given no later than the following business day after each such transaction.
3. Each of the undersigned agrees to form the Group for the purpose of (i) seeking representation on the Company’s Board of Directors, (ii) soliciting proxies or written consents for proposals submitted to shareholders for approval and the election of the persons nominated by Aviat to the Board, each at the Meeting, (ii) taking such other actions as the parties deem advisable, and (iii) taking all other action necessary or advisable to achieve the foregoing.
4. Aviat shall have the right to pre-approve all expenses incurred in connection with the Group’s activities and agree to pay directly all such pre-approved expenses.
5. Each of the undersigned agrees that any SEC filing, press release or shareholder communication proposed to be made or issued by the Group or any member of the Group in connection with the Group’s activities set forth in herein shall be first approved by Aviat, or its representatives, which approval shall not be unreasonably withheld.
6. The relationship of the parties hereto shall be limited to carrying on the business of the Group in accordance with the terms of this Agreement. Such relationship shall be construed and deemed to be for the sole and limited purpose of carrying on such business as described herein. Nothing herein shall be construed to authorize any party to act as an agent for any other party, or to create a joint venture or partnership, or to constitute an indemnification. Nothing herein shall restrict any party’s right to purchase or sell securities of the Company, as he, she or it deems appropriate, in his, her or its sole discretion, provided that all such sales are made in compliance with all applicable securities laws.
Signature Page to
Joint Filing and Solicitation Agreement
Exhibit B
7. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute but one and the same instrument, which may be sufficiently evidenced by one counterpart.
8. In the event of any dispute arising out of the provisions of this Agreement or their investment in the Company, the parties hereto consent and submit to the exclusive jurisdiction of the Federal and State Courts in the State of New York.
9. Any party hereto may terminate his, her or its obligations under this Agreement on 24 hours’ written notice to all other parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.
AVIAT NETWORKS, INC.
By: /s/ Pete Smith
Name: Pete Smith
Title: President and Chief Executive Officer
Signature Page to
Joint Filing and Solicitation Agreement
Exhibit B
WEINSTOCK LEGACY, LLC
By: /s/ Craig Weinstock
Name: Craig Weinstock
Title: President
/s/ Craig Weinstock
Craig Weinstock
Signature Page to
Joint Filing and Solicitation Agreement