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Last weekend’s FT article about Gilat Satellite Networks (NASDAQ:GILT), and potential suitors has received a lot of attention over the last few days. The article said that the company could fetch upwards of $500 million in a deal. That puts it about 15% above it’s current market value. I would expect a deal to get done, and I wouldn’t be surprised if it was for even more than the predicted $500 million.

Gilat’s business is doing well. Its revenues for Q2 ‘07 were at a 5-year high, and its net income grew strongly. It also continues to sign both extensions, and new deals. On Wednesday, it signed an expansion deal with Russian telecommunications provider North-West Telecom (OTC:NWTEY). North-West Telecom is expanding its Gilat SkyEdge satellite network to bring telephony, and broadband Internet services to a growing number of remote communities in northwest Russia. The network expansion will serve many more sites in the Murmansk, Karelia, Komi and Vologda regions. Heck, if can do a deal in Kamchatka, it would win in RISK.

The company has rejected offers in the past at lower valuations, and I would expect it to hold out for a higher premium than is currently being mentioned. At $10.90 a share, either through a takeover or growing the business, the stock looks cheap.

GILT 1-yr chart:

Disclosure: The author has no holdings in any stock mentioned.

Source: Gilat: Is an Offer on the Table?