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This undated NASA file image shows the Glory spacecraft. NASA's earth observation satellite Glory failed to reach orbit on March 4, 2011 after its protective cover did not detach following launch, the US space agency said. The satellite, which cost $424 million to produce, was too heavy to reach orbit with its clamshell-like nose cone cover clinging on and plunged into the south Pacific OceanHO

Com Dev International Ltd., a Canadian manufacturer of satellite products, is nominating three new directors to its board after an activist fund scooped up a 9.33 per cent stake in the company.

Late Monday, the Ontario-based company announced that it will grow the size of its board of directors to 11 from 9, and that two current members will retire, creating space for three new directors nominated by Crescendo Partners, and one of Com Dev's own.

Crescendo's been in the Canadian market before, taking an active role in tech names such as Bridgewater Systems, but for now it isn't quite clear what it wants to do with Com Dev, which specializes in developing products that are used by satellite companies in the military and commercial markets.

Instead of ignoring its new investor, Com Dev held talks with Crescendo before the announcement was made Monday. The two parties appear to be on good terms, for now at least. In a statement, Crescendo's chief executive officer said he is "pleased with the dialogue and collaboration."

The timing of the shakeup is a bit odd. A few years back the company took on a bunch of projects in businesses that weren't its strengths and costs soared, leading to major losses. A new CEO was installed in 2010, but the losses on certain projects continued into 2011.

However, as Cormark Securities analyst Hubert Mak recently noted, most of these troubles are now behind the company. And that's evident in the stock price. The shares bottomed around $1.50 each in October 2011, but are up over 150 per cent since, including 6 per cent on Tuesday.

So what could Crescendo want? At the moment, the two main guesses are a total sale of the company, or sales of certain divisions.

If the second case, the company's "jewels," according to Canaccord Genuity analyst Robert Young, are its passive microwave business, which has a market share above 80 per cent and is expanding in the U.S., and its exactEarth AIS marine data business, which is jointly owned with HISDESAT. This business is on the verge of breaking even on cash flows.

As for Com Dev's existing game plan, there's no word yet on whether its plan to strike small tuck-in acquisitions in the range of $20-to-$30-million will continue now that Crescendo is on board.

(Tim Kiladze is a Globe and Mail Capital Markets Reporter.)

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