Israel Newsletter November 2008: M&A Deals Galore

Invest in Israel“, Israel’s Investment Promotion Center of the Ministry of Industry, Trade & Labor, publishes a monthly newsletter with lots of good news on the Israeli market.  You may have seen some of the posts on VC Cafe earlier this month, but this is a good summary, especially for M&A deals off the internet radar.

Dollars !Invest in Israel is a great resource for potential and current investors foreign investors in Israeli start ups and I recommend checking it out.

Below are the headlines for November 2008. Pay attention to the prominence of M&A deals in the news.

  • ISRAELI FINANCIAL INSTITUTIONS STRONG, GOVERNMENT POLICY TO CUSHION GLOBAL FINANCIAL SHOCKS
  • VENTURE CAPITAL INVESTMENTS IN ISRAELI HIGH TECH COMPANIES BREAK NEW RECORD
  • MERRILL LYNCH CONFIDENT IN ISRAELI ECONOMY
  • JOHNSON & JOHNSON ACQUIRES ISRAEL’S OMRIX FOR $438 MILLION
  • SOFTWARE AG TO EXPAND R&D IN ISRAEL
  • NEW YORK-BASED CA TO BUY ISRAEL’S EUREKIFY
  • ENDOCARE TO BUY ELRON’S GALIL MEDICAL
  • MICROSOFT CHOOSES ISRAELI TECHNOLOGY FOR WINDOWS 7
  • AOL LATINO TRANSLATIONS COLLABORATES WITH BABYLON
  • ISRAELI HEALTHCARE SUPPLIER PERRIGO MAKES THIRD 2008 ACQUISITION
  • ISRAEL’S FOOD PRODUCER OSEM TO BUY FOODTECH FOR $20 MILLION
  • SINGAPORE-ISRAEL R&D FUND APPROVES 5 NEW PROJECTS

Continue reading the full articles below and see previous issues here.

ISRAELI FINANCIAL INSTITUTIONS STRONG, GOVERNMENT POLICY TO CUSHION GLOBAL FINANCIAL SHOCKS

“The Bank of Israel will continue, similar to the trend of central banks around the world, an interest rate policy that supports growth and employment, while supporting financial stability, and without hurting the downward trend in inflation,” Bank of Israel Governor Stanley Fischer said. The central bank expects inflation to return to an official annual inflation target of 1-3% by the middle of 2009.

Fischer noted that Israeli financial institutions were in better shape than those of other countries’ and would therefore not warrant the kind of intervention or higher state spending that would widen the budget deficit.

The economy is forecasted to grow approximately 4.5% in 2008 after four years of growth exceeding 5% per year. Though growth in 2009 is expected to be lower, the Bank of Israel said that growth in Israel is still forecast to be higher than in many other developed countries.

To cushion the Israeli economy from the shocks of the international credit crunch, the Ministry of Finance is set to implement an economic stimulus plan that would increase investment in projects related to infrastructure, energy, transportation, water, and tourism, boost employment, and help increase liquidity in the market.

VENTURE CAPITAL INVESTMENTS IN ISRAELI HIGH TECH COMPANIES BREAK NEW RECORD

3RD quarter capital inflow reaches 8 year high

VC financing in high tech companies in the 3rd quarter of 2008 showed a notable 45% increase over the same period last year. Despite the global economic downturn, 124 Israeli high-tech companies raised $600 million in the third quarter this year, of which $206 million was from local investors, an increase of 29% from the previous quarter.

According to the latest report by research firm Israel Venture Capital, VC investments during the first three quarters of 2008 reached $1.68 billion, up 34% from $1.25 billion for the same period in 2007. Despite an anticipated 4th quarter drop, 2008 will still be a record year for total VC investments.

MERRILL LYNCH CONFIDENT IN ISRAELI ECONOMY

International brokerage applies to join Israeli bourse as remote member

In a clear vote of confidence for the Israeli economy, the international investment firm Merrill Lynch has applied for remote membership to the Tel-Aviv Stock Exchange (TASE) providing Merrill Lynch’s clients with direct access to the bourse while increasing the exposure of Tel Aviv-listed companies to a broad spectrum of foreign investors.

“Merrill Lynch’s decision to become a remote member of the TASE is a sign of confidence in the Israeli economy and deepens Merrill’s trading platform on the Tel-Aviv Stock Exchange,” said Yoram Inbar, Managing Director of EMEA Investment Banking at Merrill Lynch, noting that the move strengthens Merrill Lynch’s long term commitment to the State of Israel and its capital markets.

Merrill Lynch is one of the largest brokerage houses in the world. Its subsidiary, Merrill Lynch International, a member of the London Stock Exchange for over ten years, operates on behalf of large institutional investors around the globe.

Established in 1935, The TASE is a fully-automated exchange with approximately 650 listed companies and a total market capitalization of $145 billion.

JOHNSON & JOHNSON ACQUIRES ISRAEL’S OMRIX FOR $438 MILLION

Healthcare company Johnson & Johnson is buying Israel’s Omrix Biopharmaceuticals for $438 million in cash. The two companies have collaborated for the past five years. Omrix, established in 1995, developed and markets the unique surgical sealant, Quixil.

In describing the acquisition, Alex Gorsky, Company Group Chairman for Johnson & Johnson stated, “Our partnership with Omrix has already expanded our capacity to provide innovative, next generation products that raise the standard of surgical care.”

Under the terms of the agreement, Omrix, a biopharmaceutical company that develops and markets bio-surgical and immunotherapy products, would operate as a stand-alone entity and would be reporting through ETHICON, a Johnson & Johnson company and leading provider of suture, mesh, hemostats, and other products for surgical procedures.

In 2006, Johnson & Johnson, a multinational pharmaceutical and health products company with 2007 revenues of $61 billion, purchased Israel’s Colbar LifeScience, a biomaterial product company.

SOFTWARE AG TO EXPAND R&D IN ISRAEL

Software AG, Germany’s second-largest software company, is looking to expand research and development in Israel and is in advanced negotiations to set up a new R&D center in Beer Sheva in cooperation with Ben Gurion University.

The decision to establish a development center in southern Israel’s Negev was reached during German Chancellor Angela Merkel’s visit to Israel in March, when Software AG Chief Executive Karl-Heinz Streibich expressed the company’s continued interest in investing in Israeli research and development.

The R&D center would focus on the development of software and systems for Software AG clients globally.

Israeli specialists have been instrumental in the development of Software AG products for over 30 years. The company, which has a market value of about $2 billion, has so far invested more than $100 million in Israeli acquisitions, including ApplinX in 2005, and SPL and Jacada in 2007. SPL has been Software AG‘s exclusive representative in Israel for the last 30 years.

NEW YORK-BASED CA TO BUY ISRAEL’S EUREKIFY

IT management software provider CA, Inc. is acquiring Eurekify Ltd of Ra’anana, Israel, a pioneer and leading provider of automated role engineering, role management, and compliance solutions which it started working with in early 2008. The terms of the acquisition were not disclosed.

“By bringing together two leaders in identity management, CA’s acquisition of Eurekify is transforming the market dynamics (in identity and access management)” said Dave Hansen, Senior Vice President and General Manager of CA’s Security Management Business Unit, noting it would provide customers with a more efficient approach for implementing identity management solutions.

Eurekify was founded with the help of Israel’s Office of the Chief Scientist in 2002, and launched its products internationally in 2004. The company’s software products help organizations address difficult role modeling, compliance modeling and policy management challenges.

CA, founded in 1976, is one of the world’s largest independent software companies, and has branches worldwide, including in Israel. In recent years, Eurekify partnered with large firms like M-Tech Information Technology and Novell’s Technology Partner Ecosystem to offer an integrated solution for customers to meet regulatory compliance requirements.

ENDOCARE TO BUY ELRON’S GALIL MEDICAL

Medical device maker Endocare is acquiring Israel’s privately held Galil Medical Ltd in an all-stock deal, forming a company with a combined revenue of $55.6 million for the twelve months ended September 30, 2008.

“As a combined company, Endocare and Galil will be better positioned to advance the acceptance and growth of cryoablation as an important treatment for cancerous and non-cancerous tumors including prostate cancer and kidney tumors,” Martin Emerson, Galil Medical’s president and chief executive said in a statement.”

The transaction between the two medical device companies is expected to close in the first quarter of 2009.

Endocare, which was founded in 1990, is an innovative medical device company focused on the development of minimally invasive technologies for tissue and tumor ablation.

Galil Medical, which is majority-owned by Elron Electronics Industries, is a global medical device company that develops, manufactures and markets innovative products utilizing a proprietary cryoablation platform that incorporates powerful freezing technology and revolutionary 17-gauge cryoablation needle design.

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MICROSOFT CHOOSES ISRAELI TECHNOLOGY FOR WINDOWS 7

Dell and Intel are already using N-trig’s DuoSenseTM technology

N-trig ‘s DuoSenseTM technology – combining pen and zero-pressure touch in a single device –will be included in the suite of multi-touch solutions offered for Microsoft’s new Windows 7 platform. Microsoft presented the technology at a product fair it recently organized to introduce future Microsoft applications. “N-trig’s DuoSenseTM technology is key to enabling multi-touch experiences,” said Gary Schare, Director of Hardware Ecosystem Product Management at Microsoft Corp.

DuoSenseTM offers the capabilities to zoom in and out, scroll up and down, and rotate images without the use of a mouse and keyboard. The technology can be implemented in a broad range of products from small notebooks to large format LCDs and can support a variety of applications. Earlier this year, Dell Corp began deploying N-trig technology on its Latitude XT Tablet PC. Last August, Intel selected DuoSenseTM technology for integration in its new UrbanMax mobile computer.

N-trig, headquartered in Kfar Saba and founded in 1999, is an Israeli R&D subsidiary of the US Corporation, N-trig.

AOL LATINO TRANSLATIONS COLLABORATES WITH BABYLON

Israel’s translation software developer, Babylon Ltd, has signed a collaboration agreement with the US Internet giant, AOL, whereby Babylon will provide AOL Latino with Web-based translation tools, allowing users to translate content from one language to another directly on the AOL Latino website.

The agreement enables users to translate content from English to Spanish, Portuguese, Italian, German and French and vice versa. In the United States, AOL Latino is one of the top 2 bilingual portals aimed at native Spanish speakers, with more than 2.1 million unique users.

Babylon, established in 1997, is an onscreen language translator. Babylon signed an official collaboration agreement with Google earlier this year, under which the two companies share revenue from search-based advertising.

AOL has been present in Israel since 1998, when it acquired instant messaging company, Mirabilis for $407 million. Other acquisitions of Israeli companies include BlogTV, an internet browser earlier this year, on-line advertising company Quigo and search engine company Yedda in 2007, and Relegence, an Israeli financial news and information search technology company in 2006.

ISRAELI HEALTHCARE SUPPLIER PERRIGO MAKES THIRD 2008 ACQUISITION

Buys Unico Holdings for $49 million

Israel’s Perrigo Company, a global healthcare supplier, announced that it has acquired Unico Holdings for approximately $49 million in cash. Privately held Unico is the leading manufacturer of store brand pediatric care, feminine care, adult hydration, and related products for retail customers in the United States.

The acquisition is expected to add nearly $50 million to Perrigo’s annual sales.

Perrigo has manufacturing facilities in the U.S., Israel, Mexico and the U.K., and has its U.S. headquarter in Michigan. The company acquired JB Laboratories for $44 million in September 2008 and Mexican manufacturer, Laboratorios Diba, S.A, for $25 million in June of the same year. It also expanded its product line last March by partnering with Teva Pharmaceuticals to sell Cetirizine, an over-the-counter version of the allergy treatment Zyrtec-D. In September 2008, Perrigo acquired exclusive sales and distribution rights to the allergy drug Levocetrizine.

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ISRAEL’S FOOD PRODUCER OSEM TO BUY FOODTECH FOR $20 MILLION

Jerusalem-based food producer Osem said its subsidiary Tivall Min Hatsomeach Ltd. (Tivall) had agreed to acquire U.S. based FoodTech International, a producer of vegetarian food products. Under the agreement, Nestle, which owns a 54 percent stake in Osem, would contribute $9.4 million for FoodTech’s intellectual property rights while Tivall would pay $10.6 million for the company’s operations.

FoodTech markets frozen meat substitute products in North America under the Veggie Patch label. The acquisition is intended to facilitate further expansion of Osem’s international operations in the North American market by leveraging FoodTech’s activity.

The acquisition follows Osem’s purchase of Tribe Mediterranean Food Company LLC, which makes and markets Middle Eastern salads in the North American market.

Osem, founded in 1942 as a marketing company, is one of the largest food corporations in Israel. Nestle currently owns 54% of Osem Foods.

SINGAPORE-ISRAEL R&D FUND APPROVES 5 NEW PROJECTS

Total Investment to reach $6.1 Million

The Singapore Israel Industrial Research and Development Foundation (SIIRD) recently agreed to invest approximately $2.5 million in five new joint venture projects between companies in each country. Including the investment by participating companies, the projects’ total investment will reach $6.1 million, the Foundation reported.

The projects will involve 68 researchers from both countries with each project including both a company in Israel and Singapore. The projects include Israel’s Celeno Communications Ltd and Singapore’s Aztech Systems Pte, Israel’s Outform and Singapore-based View Media Holdings Pte, Israel’s Xorcom Ltd and Singapore’s Voiceroute Pte, Israel’s Micronet Ltd and Singapore’s InfoWave, Israel’s Green Vision and Singapore’s SIF Technologies.

SIIRD is a cooperative venture between the Singapore Economic Development Board (EDB) and the Office of the Chief Scientist (OCS) of Israel’s Ministry of Industry, Trade and Labor. It was established in 1997 to promote, facilitate and support joint industrial R&D projects between companies and organizations from Israel and Singapore which have the potential to lead to successful commercialization.

Eze Vidra
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Eze Vidra

Chief Innovation Officer at Antidote
Eze is the Chief Innovation Officer at Antidote, a startup helping patients search and match to clinical trial, to accelerate medical breakthroughs. Previously, Ezewas a General Partner at Google Ventures Europe. Before GV, Eze founded and led Campus London, Google's first physical hub for startups, and was the Head Google for Entrepreneurs in Europe. He's an experienced product manager and startup mentor. In 2012 Eze founded Techbikers, a non-for profit supporting children education in developing countries.
Eze Vidra
Follow me

Latest posts by Eze Vidra (see all)

Eze Vidra

Eze is the Chief Innovation Officer at Antidote, a startup helping patients search and match to clinical trial, to accelerate medical breakthroughs. Previously, Eze was a General Partner at Google Ventures Europe. Before GV, Eze founded and led Campus London, Google’s first physical hub for startups, and was the Head Google for Entrepreneurs in Europe. He’s an experienced product manager and startup mentor. In 2012 Eze founded Techbikers, a non-for profit supporting children education in developing countries.