Mergers and acquisition (M&A) transaction figures compiled by the IVC in its IVC 2009 Yearbook give cause for worry . The absolute number of merger and acquisition deals involving Israeli high-tech companies in 2008 remained steady, but the average deal size fell 18%, from $38 million in 2007 to $31 million in 2008.
There were no IPOs made by Israeli high-tech companies during 2008. This was the first year since 2003 that there were no IPOs, and it reflected the situation on global technology IPO markets.
In contrast, in 2007, 27 Israeli firms raised $701 million on stock exchanges in the US, Europe, and the Tel Aviv Stock Exchange (TASE). Similar amounts were raised in 2006 and 2005.
There were 84 merger and acquisition deals in 2008 involving Israeli high-tech firms, worth a total of $2.64 billion. The number of deals was in line with the two previous years - there were 85 in 2007, and 88 in 2006. However, while the total value of the transactions was about 19% lower than the $3.2 billion raised in 2007, it reflects a very sharp drop of 74% from the nearly $10 billion value in 2006.
IVC CEO Koby Simana said, "Lower valuations present an opportunity to global technology leaders seeking innovative technologies at bargain prices. We forecast an active M&A market in Israel in 2009 as a result.”
M&As of Israeli VC-backed companies in 2008 totaled $1.5 billion, down 22 percent from 2007 figures. The number of VC-backed M&A deals at 34 slightly edged ahead of 2007’s 33 deals.
Two major deals in 2008 were both within the life sciences sector. Johnson & Johnson’s Ethicon division acquired biological surgical sealant developer Omrix Biopharmaceuticals Ltd. (Nasdaq:OMRI) for $438 million, and US medical device and services company St. Jude Medical acquired MediGuide, a firm focused on inter-body navigation and minimally invasive cardiology, for $300 million.
Pharmaceutical giant Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) accounted for 87% of acquisitions of foreign companies by Israeli firms. The total spent by Israeli acquirers was $9.42 billion, with approximately 40 deals in 2008. During the year, Teva bought two US-based firms, Barr Pharmaceuticals and CoGenesys, and Bentley Pharmaceuticals of Spain.
Published by Globes [online], Israel business news - www.globes-online.com - on March 25, 2009
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