Comtech Telecommunications Corp. (CMTL) experienced a significant after-hours surge of 5.63% on Monday, following a major corporate announcement that reshapes the company's strategic direction.

The communications technology firm announced it has entered into a definitive agreement to sell most of its Satellite and Space Communications (S&S) segment to Gilat Satellite Networks Ltd. for $157.5 million, with $10 million paid at signing. Comtech anticipates net cash proceeds of approximately $143 million to $145 million from the transaction, which it plans to use primarily to reduce debt - allocating 65% to prepay senior secured credit and 35% for subordinated debt repayment.

The divestment marks a strategic shift for Comtech to focus exclusively on its public safety technology business under the Allerium brand, with the company expecting annual cost savings of $11 million to $13 million following the transition. Additionally, Comtech reported better-than-expected fiscal third-quarter results, with an adjusted loss of 22 cents per share beating Wall Street estimates of a 27-cent loss.