Israeli cancer cryotherapy start-up Galil Medical Ltd. is merging with California medical device company Endocare Inc. (Nasdaq: ENDO) through a share swap. The merged company will develop cryoablation, a minimally invasive method to freeze and destroy cancerous tumors. The companies expect to close the deal during the first quarter of 2009.
Galil Medical will become a wholly-owned subsidiary of Endocare. Endocare shareholders will own 52% of the merged company, and Galil Medical shareholders will own 48%. Endocare will raise $16.25 million through the issue of shares to some institutional investors of Endocare and Galil, increasing the number of shares to 30 million.
Endocare's share closed at $0.96 yesterday, giving a market cap of $11 million.
Yokneam-based Galil Medical president and CEO Martin J. Emerson and Endocare CFO Michael R. Rodriguez will jointly head the merged company.
Galil Medical's shareholders are IDB Holding Corp. Ltd. (TASE:IDBH) unit Elron Electronic Industries Ltd. (Nasdaq: ELRN; TASE: ELRN), with a 21% stake, Pitango Venture Capital, Israel Infinity Venture Capital, Astra Technological Investments (Euronext:STH), Thomas, McNerney & Partners (TM Partners), Investor Growth Capital (Investor AB), and private investors. The company was founded in 1997, but subsequently struggled to get its product on the market. It posted an operating loss of $7 million on $12.5 million revenue in the first half of 2008.
Endocare posted an operating loss of $3.8 million on $16 million revenue in the first half of 2008. The companies said that the merged company had a pro forma gross profit of $39.1 million on $55.6 million revenue in the year through September 2008. Rodriguez predicts that the merged company will report positive earnings before interest, taxes, depreciation and amortization (EBITDA) within 18 months.
Published by Globes [online], Israel business news - www.globes-online.com - on November 11, 2008
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