from the January 2018 issue

Israeli M&A market cooled in 2017

Mergers and acquisitions of Israeli companies totaled $12.2 billion in 2017, compared with $16.8 billion in 2016.

The average price of mergers and acquisitions (M&A) deals involving Israeli companies was down 27% in 2017, the first decline in five years, while the number of deals increased, according to figures from a report on 2017 issued by PriceWaterhouseCoopers (PwC) Israel. According to PwC Israel, the monetary value of M&A deals in 2012, totaled $12.2 billion, compared with $16.8 billion in 2016 (the figures for the $15 billion Mobileye acquisition by Intel and the $40 billion acquisition of Allergan's generic division Actavis by Teva Pharmaceutical Industries LTD. (NYSE: TEVA; TASE: TEVA) were excluded). The number of deals in 2017 grew 9% to 131, while the average price dropped 38% to $142 million. PwC Israel noted, however, that the number of deals with a value of over $100 million rose again in 2017. 9% of the deals carried out were closed at a value of $400 million-$1 billion, compared with 5% in 2016.

"We are seeing another fall in the proportion of deals with a value less than $100 million, from 85% in 2012 to 68% in 2016 to 66% in 2017," the report stated. The number of deals with a value of over $1 billion (including Mobileye) fell to three, compared with five in 2016 (including Allergan), and the same in 2015.

"Deals of this type are already not as exceptional in the Israeli market as they once were, which shows the continued development and reinforcement of the M&A market in Israel," says PwC Israel partner and transaction services leader Liat Enzel-Aviel. She also believes that the fall in the average price per deal in 2017 does not necessarily indicate a change in trend.

PwC says that 45% of all deals closed by foreign investors were at prices of over $100 million per deal, and 34% of them were at a value of over $200 million. Five deal closed by foreigners in 2017 were in the $400 million-$1 billion price range, compared with only one deal in 2016. PwC regards this as evidence of the Israeli market's strength and a vote of confidence by global players in the local economy. On the other hand, the prices of acquisitions by Israeli players fell. There was no deal in 2017 in which a local company party acquired a company with a value of over $1 billion. PwC attributed this to the fact that Teva, which previously acquired many companies, is now selling assets and activities. The biggest deals this year were Delek Group Ltd.'s (TASE: DLEKG) acquisition of a controlling interest in Ithaca and the acquisition of ABM Italia by Keter, both for $500 million.

Reprinted from the Israel High-Tech & Investment Report January 2018

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