Atia Group Ltd. (LSE: ATIA; TASE: ATIA) shareholders have approved a merger with medical device company Saliwell Ltd., which develops electronic products for preventing dryness in the mouth.
A few days ago, Atia Group shareholders petitioned the court to postpone the general shareholders meeting, which was convened to approve the deal, on the grounds that it discriminated against small shareholders.
Atia Group currently has just one asset, 50% of a building in Croatia. Atia Group controlling shareholder, Shalom Atia (36%), will buy this property for NIS 6 million. Atia will get the money from a Saliwell investor, Tamir Zoltonsky, in exchange for his shares in the company.
The deal will turn Atia Group into a medical device company with NIS 6 million in cash, while Shalom Atia will get the company's real estate asset in exchange for his shares. Atia Group will also allot new shares to the new owners, which will give Zoltonsky and Saliwell's founders 90% of the company.
The result is that the holdings of Atia Group's minority shareholders will be diluted from 36% to 10%, and they forego the company's real estate asset. In exchange, they receive Saliwell's business and NIS 6 million. The opponents of the deal claimed that Shalom Atia received options that compensate him for the transfer of control in the company, so that he effectively received the property for free. They also claim that the value of Saliwell presented to them is unrealistic, and that the company's presentation was incorrect with regard to the majority needed to approve the deal.
The court rejected the petition, ruling that the vote would be held as scheduled. The deal was approved with a 63% majority.
Saliwell has a few tens of thousands of dollars in sales of its leading product for the treatment of dry mouth, or xerostomia. Saliwell president Dr. Andy Wolff and CEO Ben Z. Beiski founded the company in 2001. Wolff is a dentist and specialist in oral medicine and Beiski is a biomedical engineer, and previously managed communications start-ups and Nortel Networks Israel. Until now, the company was mainly funded by Zoltonsky and EU framework programs for R&D.
Saliwell's device stimulates the saliva glands to encourage them to produce saliva. The product has EU CE Mark certification, but is not yet certified for marketing in the US. Dry mouth affects 10% of the population, and can lead to sleep disturbance, which can lead to higher blood pressure.
Published by Globes [online], Israel business news - www.globes-online.com - on January 3, 2011
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