from the May 2009 issue

Value of Israeli high-tech M&A fell 19 percent in 2008

The value of Israeli high-tech company mergers and acquisitions fell by nearly one-fifth in 2008 to $2.64 billion, the Israel Venture Capital (IVC) Research Center said on Wednesday.

There were 84 deals in total, a similar number compared to those in 2007 and 2006 but the value decreased by 19 percent from 2007 and 74 percent from 2006.

"Lower valuations present an opportunity to global technology leaders seeking innovative technologies at bargain prices," said Koby Simana, IVC chief executive. "We forecast an active M&A market in Israel in 2009 as a result."

The average acquisition size was $31 million in 2008, down 18 percent from 2007.

Deals involving companies backed by Israeli venture capital totaled $1.5 billion, down 22 percent from 2007.

For the first time since 2003 no initial public offerings were made by Israeli high-tech companies last year, reflecting the problematic global markets, IVC said.

The two most significant M&A deals last year were in the life sciences sector which is considered part of the high-tech sector in Israel.

Johnson & Johnson's (JNJ.N: Quote, Profile, Research, Stock Buzz) Ethicon division acquired Omrix, a provider of bio-surgery and passive immunotherapy products, for $438 million in cash.

U.S. medical device and services company St. Jude Medical (STJ.N: Quote, Profile, Research, Stock Buzz) acquired MediGuide, a firm focused on inter-body navigation and minimally invasive cardiology, for $300 million.

Acquisitions of foreign companies by Israeli firms reached $9.42 billion, with approximately 40 deals done in 2008. Teva Pharmaceutical Industries (TEVA.O: Quote, Profile, Research, Stock Buzz) (TEVA.TA: Quote, Profile, Research, Stock Buzz) accounted for more than 87 percent of the total with its purchases of two U.S.-based firms - Barr Pharmaceuticals and CoGenesys - and Bentley Pharmaceuticals of Spain.

Reprinted from the Israel High-Tech & Investment Report May 2009

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