Permira Fund mulls buying Given Imaging

The private equity firm's representatives were in Israel last week to visit the pill camera developer's headquarters.

Sources inform "Globes" that representatives of private equity firm Permira Fund visited the offices of Given Imaging Ltd. (Nasdaq: GIVN; TASE: GIVN) in Yokne'am last week as part of efforts by IDB Holding Corp. Ltd. (TASE:IDBH), controlled by Nochi Dankner, to sell the company. Permira Fund is probably not the only international investor interested in buying control of Given Imaging.

Given Imaging, which has developed a camera in a pill for gastroenterological diagnoses, has been trying to sell the entire company over the past two months but because it did not receive attractive enough offers, it decided to give up on the attempts two weeks ago.

At the same time, Given Imaging's controlling shareholder, IDB unit Discount Investment Corporation (TASE: DISI) reported that it was trying to sell its shares in the company. Discount Investment holds 46% of Given Imaging - 15.2% directly and 31% through its subsidiary Elron Electronic Industries Ltd. (TASE: ELRN) (including 9% held by Rafael Development Corporation (RDC) of which Elron owns 50.1%).

Since Given Imaging reported that it had stopped the process of selling the company, its share price has fallen 12.6%, giving the company a market cap of $493 million. The controlling core is worth $227 million but the sellers would expect a premium of tens of percentage points on this amount.

In the past, Dankner saw Given Imaging as having potential annual revenue of $1 billion. In 2012 sales totaled $190 million.

A private equity firm sounds like the most reasonable potential buyer for Given Imaging in the present situation. Until two weeks ago the company was for sale as a single unit and potential buyers were major healthcare and medical device companies that saw Given Imaging as a source of growth. From the moment that only the controlling core was for sale and not the entire company, the likelihood rose that any buyer would be a financial body which will try to grow the value of Given Imaging, and in the future realize its holding at a premium.

In the coming few months, two events are likely to influence the price of Given Imaging for the better. The company expects marketing approval for its Colon2 colon diagnostic pill in Japan within a year and a similar approval is expected subsequently in the US.

Permira Fund is a European private equity fund founded in 1985 with €20 billion of investments under management. Half of those investments are in Europe, 41% in the Middle East and the rest in Asia and North America. Investments include fashion company Hugo Boss, chipmaker Freescale and genealogy website Ancestry.com,. which it recently acquired for $1.6 billion.

In Israel, Permira acquired drip irrigation company Netafim Ltd. for €800 million in 2011. It had also acquired control of NDS in 2009, at a company value of $3.7 billion. NDS, which has major activities in Israel, was sold to Cisco last March for $5 billion.

Permira has also been linked with Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) in the past, and held talks to buy IDB unit Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), which did not yield results. More recently it has been linked with Caesarstone Bat Yam Ltd. (Nasdaq: CSTE).

Published by Globes [online], Israel business news - www.globes-online.com - on January 27, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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