Endoscope maker Medigus Ltd. (TASE:MDGS) shareholders have rejected an investment offer by controlling shareholder Dexxon Technologies (2005) Ltd.
Dexxon had offered to provide Medigus with an equity line of NIS 7.8 million, at a price of NIS 2.25 per share. Medigus had the right to draw on the equity line in amounts and timing at its own discretion, without any commitment to use any of it.
Since the offer was made, Medigus has made two announcements. The first was completion of a new miniature camera together with Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE: TSEM), which supplies the processors for it. Medigus estimates that it will be able to earn several million dollars a year from this new product.
The second announcement was the signing of a distribution agreement for the company's lead product, the SRS endoscope for intra-luminal treatment of Gastroesophageal Reflux Disease (GERD), with a "major international company". Medigus will report an initial payment of $4.5 million, and report an additional $11 million over the coming year, subject to meeting milestones.
With these announcements, Medigus has obtained two sources of revenue that previously did not exist. Medigus's share rose a further 0.3% today to NIS 2.65, above the price of Dexxon's offer, which represented a 38% premium at the time.
Even before receiving Dexxon's latest offer, Medigus had submitted a draft prospectus for an offering, and it may decide to raise capital that way instead of taking Dexxon's equity line. Earlier, in December 2008, Dexxon offered a NIS 7.5 million equity line at NIS 1.50 per share of Medigus, an offer that Medigus's audit committee turned down.
Published by Globes [online], Israel business news - www.globes-online.com - on August 26, 2009
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