Alvarion signs non-binding agreement to buy Wavion

The WiMAX company is considering paying $20 million for the Wi-Fi developer, which is controlled by Nochi Dankner's Elron.

Alvarion Ltd. (Nasdaq: ALVR; TASE: ALVR) has signed an extension to its non-binding letter of intent signed three months ago to acquire Wavion Wireless Networks Inc. from Elron Electronic Industries Ltd. (Pink Sheets: ELRNF; TASE: ELRN) and BRM Capital.

Elron, the venture capital arm of Nochi Dankner-controlled IDB Holding Corp. Ltd. (TASE:IDBH), owns 67% of Wavion.

The budding deal makes sense for both sides. Alvarion is eager to expand activities beyond its traditional WiMAX endeavors, which are struggling to take off, while Elron wants to realize its asset.

It is thus no surprise that Alvarion should consider buying Wavion, which operates in the Wi-Fi market. Market sources expect any deal to be for about $20 million. Wavion has raised $25.6 million from investors since it was founded, according to IVC.

But what is a surprise is that the deal was first struck three months ago, and it expired without a binding deal being signed, and only today after reports in the Israeli media about a deal, did Alvarion and Elron clarify in an announcement to the TASE that there is a non-binding deal. Alvarion said that it had demanded that the agreement not be published because it might scupper the deal. There is still uncertainty over whether the deal will finally come to fruition.

Alvarion's share price fell 1.9% on Nasdaq on Friday to $1.04, giving a market cap of $65 million, and fell 3.9 on the TASE today to NIS 3.66.

Published by Globes, Israel business news - www.globes-online.com - on October 9, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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