As every month, VC Cafe is re-posting the “Invest in Israel” Newsletter, published by the investment promotion center of Israel’s Ministry of Industry, Trade and Labor, which offers many helpful tools for prospecting investors. See the October 2010 edition after the jump. For previous editions, click here.
ISRAEL’S STATISTICS BUREAU FORECASTS 4% GROWTH IN 2010
The Israeli Central Bureau of Statistics (CBS) forecasts 4% growth for 2010 based on data it accumulated over the first nine months of the year.
The growth figure is largely based on a new 9.1% growth forecast for 2010 exports. Exports, which comprise more than 40% of Israel’s economic activity, had dropped 12.5% in 2009.
The CBS further expects consumer spending to grow 4.6% in 2010 following a smaller 1.7% rise in 2009, while investment in fixed assets is estimated to grow 6.2% following a 5.8% drop in 2009.
The Bank of Israel has also forecast 4% growth in 2010, though 2011 growth is seen slightly lower at 3.8% owing to projected weakness in the economies of Israel’s main trading partners, the United States and Europe.
US CHIPMAKER PMC SIERRA ACQUIRES ISRAELI WINTEGRA
PMC-Sierra, a premier Internet infrastructure semiconductor solution provider, is purchasing Wintegra Inc., a leading Israeli provider of highly integrated network processors optimized for mobile backhaul, 3G and 4G wireless and wireline broadband networks
PMC-Sierra is buying Wintegra for a net purchase price of $213 million and will pay up to an additional $60 million based on growth and performance milestones in 2011. Wintegra founders Kobi Ben-Zvi and Robert O’Dell will join PMC-Sierra.
“Carriers are moving rapidly to IP-based mobile backhaul, and Wintegra’s product offering is uniquely positioned to enable this packet transition and breakthrough the bandwidth bottlenecks faced in mobile networks,” said Greg Lang, president and chief executive officer of PMC-Sierra.
“Given the strong strategic fit between the two companies, joining forces will allow us to further accelerate the industry’s transition to IP-based networks,” Kobi Ben-Zvi, founder and chief executive officer of Wintegra, said.
Wintegra, founded in 2000, has 165 employees with the majority of its R&D development team located in Ra’anana, Israel, and Austin, Texas.
In 2006, PMC-Sierra acquired Herzliya-based Passave, a developer of system-on-chip semiconductor solutions for the Fiber To The Home (FTTH) access market, for $300 million. In addition to the FTTH market, PMC-Sierra also provides semiconductor solutions for Enterprise and Channel Storage, Wide Area Network Infrastructure, and Laser Printer/Enterprise market segments
FRENCH GIANT ESSILOR BUYS HALF OF ISRAELS SHAMIR OPTICAL
France’s Essilor International, the world’s top maker of corrective eye lenses, is buying 50 percent of Shamir Optical Industry Ltd in a cash deal worth $130 million.
There are important synergies between Shamir Optical and Essilor. Shamir is the only company listed on Nasdaq to develops multifocal lenses that correct both near and long vision, while Essilor is a world leader in developing a wide range of ophthalmic lenses. “The aim of the deal is collaboration for the benefit of both sides,” said Shamir Optical CEO Amos Netzer.
Upon closing the deal, Essilor will fully consolidate Shamir Optical while keeping the Israeli management team of Shamir Optical in place. Shamir Optical will also continue to produce and promote its brands, products and services as a separate business entity.
Headquartered in Kibbutz Shamir, Israel, Shamir Optical is a fast growing provider of innovative products and technology to the ophthalmic lens industry. Shamir Optical reported revenues of $142 million in 2009, generated mainly in Europe and the United States, and has about 1,400 employees.
KOREA’S POSCO SIGNS AGREEMENT SEEKING ISRAELI R&D
Pohang Iron and Steel Company, Korea’s fifth largest conglomerate also known as Posco, joined Israel’s Global Enterprise R&D Cooperation Framework. Posco, today the world’s second largest steel producer and ranked 272nd in the Fortune 500, is both the first Korean firm as well as the first company from Asia to join the Israeli framework.
The steel giant, which also invests in R&D through its privately held Postech university, considered one of Asia’s best technological institutes, first came to Israel in 2008 through the Korea-Israel Industrial Research and Development Foundation (KORIL).
Posco is exploring Israeli innovations in the water technology and renewable energy sectors. Posco was established in 1968 to supply metal to the then struggling Korean economy, and grew along with its booming car, boat and electronics industries. In 2008, the company, which employs about 30,000 worldwide, reported revenues of $28.8 billion, of which $2.5 billion net profit.
The Global Enterprise R&D Cooperation Framework encourages cooperation in industrial R&D between multi-national companies and Israeli start-ups. MNCs that have so far taken advantage of this program include: GE, Oracle, Microsoft, IBM, Intel, Merck, BT, Coca Cola, and others.
STANLEY FISCHER NAMED WORLD’S TOP BANK GOVERNOR FOR 2010
“Israel’s durability during and after the financial crisis, proves that Stanley Fischer deserves the honor he receives among the elite of the international financial community,” – Euromoney magazine
Euromoney magazine, a leading international banking, finance and capital markets news publication, named Bank of Israel Governor Stanley Fischer the world’s best bank governor for 2010 for his leadership of Israel’s economy in the wake of the global financial crisis.
The magazine, which has been giving out the award to the outstanding central bank governor for the last 30 years, commended Fischer for striking the ideal balance between moderating inflation and supporting economic recovery.
“His bold move to raise interest rates in September 2009 – the first country to do so after the crisis – proved well-guided and prescient,” the magazine noted. It also praised the central bank chief for his involvement in the foreign currency trade.
“His innovative move towards an interventionist exchange-rate policy, whilst controversial at the time, has bolstered Israel’s reserves while boosting the country’s exports, which are key to its economic performance,” the magazine said.
US SILICON VENDOR BROADCOM BUYS ISRAEL’S PERCELLO FOR $86 MLN
Broadcom Corporation, a global leader in semiconductors for wired and wireless communications, is acquiring Percello Ltd., a developer of system-on-a-chip (SoC) solutions for femtocells.
Femtocells are small, low power cellular base stations used in residential and enterprise business settings that communicate with a service provider’s network through a broadband connection and extend coverage indoors where signals are weak.
“The femtocell market has turned the corner in 2010 with more than 1 million femtocells global shipments expected by conservative estimates this year. By 2015 we see more than 50 million femtocells being shipped annually with WCDMA femtocells making up the bulk of the market,” Aditya Kaul, of Mobile Networks, ABI Research, said.
Founded in 2007, Percello provides innovative and customized solutions that address the key business and technological challenges of equipment vendors in the emerging Femtocell market.
Broadcom, headquartered in Irvine, California, is one of the world’s largest fabless communications semiconductor companies, and addresses both wired and wireless transmission of voice, video, data and multimedia. In 2009 it boasted revenue of $4.49 billion.
YAHOO BUYS ISRAELI WEB ADVERTISING FIRM DAPPER
Internet giant Yahoo is acquiring Israeli display ad optimization technology developer start-up Dapper for $55 million.
Dapper currently partners with Sunnyvale, California-based Yahoo and following the acquisition its development center in Ramat Gan will become Yahoo’s development center in Israel.
Dapper, which was founded in 2006, developed a technology platform that enables advertisers and agencies to create interactive display ads which reach the relevant audience.
QUALCOMM BUYS MOBILE WEB COMPANY ISKOOT
Wireless communications chip developer Qualcomm Inc. is acquiring iSkoot Technologies Inc., an Israeli developer of technology for the transmission of web services on mobile telephones. iSkoot is Qualcomm’s first acquisition in Israel.
iSkoot, founded in 2005, has an office in Silicon Valley and an R&D center, which employs half the company’s workforce, in Bet Shemesh, Israel. The company, which originally focused on the development of VoIP solutions for mobile telephones, develops software to aggregate social network input into a single cellular application without taxing the phone’s battery.
Qualcomm, the world’s largest supplier of mobile telephone processors and owner of the intellectual property for the CDMA protocol, has a market cap of $72 billion.
ERNST & YOUNG SEES RISE IN ISRAELI ACQUISITIONS FOR 2010
Ernst & Young (E&Y), one of the “Big Four” global auditors, forecasts Israel will have 24 mergers and acquisitions in 2010, worth about $1.75 billion, higher than the 17 deals made in 2009 for $1.5 billion.
During September and October alone, 13 Israeli companies were bought in multi-million dollar deals, including seven in October, and six in September.
In September, Google bought its second Israeli startup, Quiksee, also known as MentorWave Technologies, which allows users to create location-based interactive media content and is seen as the missing link in Google’s Street View service, for $10 million. Google had earlier bought LabPixies in April for about $25 million.
In early October, The McGraw-Hill Companies, Inc., one of the largest publishers of educational books in the world, bought educational software startup Tegrity, the fourth exit for private equity firm Infinity Group in 2010. Tegrity, which helps educational institutions record lectures, and enables students to view them anytime and anywhere over the Internet or on any audio or video-enabled device, was sold after it had been under Infinity’s wings for 10 years.
E&Y said it expected many more Israeli start-ups to be acquired in the near future as more credit was available in the market allowing large hi-tech companies and private equity firms alike to invest in innovative new technologies.
LONELY PLANET RANKS TEL AVIV 3RD HOTTEST CITY
Travel guide company Lonely Planet named Tel Aviv third in a list of the world’s best cities, praising the coastal metropolis for its art and music scenes as well as its relaxed, liberal culture.
The panel, which included Lonely Planet founder Tony Wheeler, described Tel Aviv as being unified by the religion of hedonism, yet tolerant, cultured and a truly diverse 21st-century hub.
“Tel Aviv is the total flipside of Jerusalem, a modern Sin City on the sea rather than an ancient Holy City on a hill,” Lonely Planet said in its “Best in Travel” guide which it has put out every year for six years now, adding that there are more bars than synagogues.
On a cultural note, the world renowned tourist guide credits Tel Aviv’s university and museums with making it “the greenhouse for Israel’s growing art, film and music scenes.
The company’s entry on Tel Aviv also describes its architecture, including the fact that this “White City,” so named for its many Bauhaus structures, has been recognized by UNESCO as a world heritage site.