Brazilian optical network solution company Produtos de Alto Desafio Tecnológico de Campinas S/A (Padtec) has acquired Israeli optoelectronic module start-up Civcom Inc. for $30-40 million. The acquisition is one of the most important acts in Israel by a Brazilian company, and is apparently the first acquisition of an Israeli company, certainly in high-tech, by a Brazilian company.
Civcom will function as a subsidiary of Padtec, which is planning an IPO. When this happens, details about the acquisition may be disclosed.
Civcom CEO Marian Raz told "Globes" that Padtec was a customer and bought the company in part to expand its own product line. "Civcom will continue as usual as a subsidiary of Padtech. We won't be an R&D center or division; we'll continue in our present format and even grow. I hope that by the end of the year, we'll have 50 development, sales, and production employees."
"Globes": If the company is so successful, why sell it?
Raz: "Our success is nice, but our shareholders are defunct venture capital funds. The company's sales and growth - we've grown more than three-fold - require resources that our investors lacked. In this sense, the acquisition is like an investment."
Civcom's exit is not very impressive. Although the company's circumstances have been good for the past couple of years, it has raised $38 million since 2000 from Pitango Venture Capital, Jerusalem Venture Partners (JVP), Concord Ventures, Ascend Technology Ventures, Formula Ventures, and Morris Kahn's Aurum Ventures MKI Ltd.. They will barely see a return on their investment.
Civcom has undergone many reincarnations, including a merger with another Israeli start-up, Xlight Photonics. The company makes its combined hardware and software optoelectronic modules for optical networks in Israel.
There is a reason for the low price tag in comparison with the investment in the company: most of Civcom's investors lost the desire to continue supporting it for one reason or another. Pitango and Concord became shareholders in Civcom through its merger with Xlight Photonics. Pitango's investment was through the Pitango III Fund, which was raised in 2000 and is already fully invested; Ascend has been dismantled despite quite good performance by its $100 million Ascend II Fund; the Concord II Fund was liquidated 18 months ago; and Formula Ventures has also been liquidated and is not raising a follow-on fund. Consequently, Civcom financing options were quite limited.
Published by Globes [online], Israel business news - www.globes-online.com - on March 12, 2008
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