Satellite ground equipment manufacturer Radyne Corp.

completed Aug. 2 its acquisition of small-satellite builder AeroAstro, a purchase that Radyne

managers say is part of a broader growth strategy that is superior to any takeover offer they have received.

Phoenix-based Radyne remains open to takeover proposals but has not seen any credible offers similar to what its largest shareholder insists are available to Radyne if the company would only look for them.

In a July 30 conference call with investors, Radyne Chief Executive Myron Wagner and Chief Financial Officer Malcolm Persen said the company has received no indication that a prospective buyer would be willing to offer a 50 percent premium to the company’s current value on the U.S. Nasdaq stock market.

Investment company Discovery Group LLC is urging Radyne to hire an outside investment banker to evaluate bids for Radyne that Discovery insists would give Radyne shareholders $14 to $16 per share – equivalent to about a 50 percent increase over where the company’s stock has been trading. Discovery says it owns about 8.8 percent of Radyne’s outstanding stock and is the company’s largest single shareholder.

“We have not received inquiries that reflect the premium that you described,” Wagner told Discovery Managing Partner Michael R. Murphy during the conference call. Murphy and Discovery had written Radyne’s board of directors

July 25 saying that a quick sale of the company would generate shareholder returns far superior to the returns likely if

continues following its current business plan.

In its letter, Discovery said its own research had turned up “multiple parties that are interested in acquiring Radyne at a significant premium. … [I]t is very likely that shareholders could achieve at least a 50 percent premium.”

said Radyne’s board has, on its own behalf and independent of Radyne management, sought outside advice on the possible sale of the company but has not found offers that the board believes are as promising as Radyne’s current plan of both internal and external growth.

Wagner said Radyne remains open to takeover offers that would deliver value to shareholders and “absolutely” will

evaluate inquiries and respond to them.

purchased Ashburn, Va.-based AeroAstro Inc. for $17.25 million in cash and 81,699 shares of Radyne stock, and

also is assuming $250,000 in AeroAstro debt.

Person said AeroAstro, which was founded in 1988, is well-positioned to realize annual revenue growth “in the teens over the next two or three years, if not north of that,” as government and commercial customers realize the performance now available in small, low-cost satellites.

Wagner said indications are that AeroAstro is poised for substantial growth in the next few years and that Radyne will be able to take advantage of that growth both as the small-satellite builder’s owner

and by leveraging AeroAstro’s

government contacts

to benefit Radyne’s current business.

“What excited me about the business is that there hasn’t been anything new in that arena – the small spacecraft arena – basically forever,” Wagner said. “Now there is an awful lot of funding being channeled to these vehicles because of new capability they offer at an affordable price. What we want to see is a core concept – a reconfigurable vehicle for multiple applications for government and commercial users. We’ll be able to sell quite a few of them.”

AeroAstro Chief Executive and founder Rick Fleeter said the purchase, which he referred to in an Aug. 2 statement as a “merger,” would help AeroAstro achieve its goal of “making space and communications services available and important to an expanded community.” Fleeter will continue with the company, Wagner said.




of $64 million for the six months that ended July 30 down 3 percent from a year earlier, with per-share profit down 20 percent during the period. But the company said it booked a record amount of new orders between March and June and Wagner said new products in the pipeline should lift revenue and profit margins in 2008.