Aesthetic medical device company Syneron Medical Ltd. (Nasdaq: ELOS) is to invest $1.05 million in Shaldot Metal Works subsidiary QRay Ltd. The company is making the investment at a value of $11.6 million, and will invest a further $540,000 within three years and half, at one of the following milestones: additional investment in the company, a public offering, or achievement of agreed sales targets.
In addition, the two sides agreed that Syneron will pay Shaldot a one-time license fee of $100,000 for a limited, non-exclusive, worldwide license to use QRay's patents. The agreement was reached following a lawsuit originally filed by Shaldot three years ago in which it sought damages and injunctive relief for infringement of Shaldot's Israeli patent. Syneron also filed a countersuit against Shaldot for damage it caused to Syneron's IPO on Nasdaq. Aesthetic phototherapy is a field that has seen countless patent infringement suits and countersuits in recent years, and these usually end with out-of-court settlements that allow all sides to continue using the technology.
Like Syneron, QRay has also developed methods for treating cell tissue using light at differing ranges. It specializes in the prevention of mouth sores in bone marrow transplant patients, and the treatment of chronic sores caused by, among other things, diabetes. Syneron has plenty of cash, and for that and strategic reasons, it occasionally invests in various start-ups whose activity corresponds to its own.
Syneron's investment reflects a value of $11.6 million for QRay, which implies a $10 million value for the stake of Shaldot, which will continue to own 88% of its subsidiary. Shaldot, which produces and markets vehicle towing accessories, posted a profit of NIS 1.6 million on sales of NIS 20.8 million for 2006.
Published by Globes [online], Israel business news - www.globes.co.il - on October 11, 2007
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