Average acquisition increases by 21 percent
The following summarizes merger & acquisition activity of Israeli and Israel-related high-tech companies in 2009. The following data are based on information derived from the IVC-Online Database, developed and maintained by IVC Research Center, which for more than 13 years has been at the forefront of Israeli high-tech, venture capital and private equity research. Additional details about Israeli high-tech
In 2009, M&A proceeds involving Israeli companies that were either acquired or merged, totaled $2.54 billion, 7 percent below 2008 levels ($2.74 billion), and 33 percent lower than proceeds in 2007 ($3.79 billion). The top ten deals in 2009 yielded $2.02 billion, 80 percent of the total for the year. Four deals exceeded the $200 million mark and five deals exceeded the $100 million mark.
Sixty-three Israeli companies were acquired or merged in 2009, a 28 percent drop from an average of 87 companies in the previous three years (82 in 2008, 87 in 2007 and 94 in 2006). However, average deal size in 2009 was $40 million, an increase of 21 percent from $33 million in 2008. VC-backed deals (28) totaled $1.55 billion, an increase of 3 percent compared to (35) $1.5 billion in 2008.
According to Koby Simana, IVC CEO "Notwithstanding the increase in average deal size, 2009 was successful for buyers due to a sharp decrease in company valuations." "Moreover" noted Simana, "We expect considerable M&A activity in 2010, providing attractive deals for companies eager to capitalize on the many current opportunities. From the standpoint of investors in high-tech companies, M&A deals will be welcome, even at moderate valuations, in order to receive an immediate payback."
The most noteworthy M&A deals of 2009 were Siemens' $418 million acquisition of Solel; Medtronic's acquisition of Ventor, estimated at $325 million; and IBM's $225 million acquisition of Guardium.
Israeli companies have also been acquirers of foreign companies, transacting 15 deals in 2009 for a total of $380 million. This is a sharp decrease from 2008, which saw the completion of 39 deals valued at $9.5 billion (including Teva's acquisition of Barr Pharmaceuticals for $7.46 billion). The most active acquirer among Israeli companies in 2009 was Frutarom Industries, a producer of flavors and fine ingredients, which acquired three foreign companies for a total of $37 million.
Worldwide technology IPO markets were weaker in 2009, as in 2008. Only one IPO was made by an Israeli high-tech company during 2009. D-Pharm, a clinical stage biopharmaceutical company, raised $22 million on the Tel Aviv Stock Exchange. No IPOs were made in 2008.
In the last decade high-tech companies raised some $17 billion from investors, compared to over $48 billion of capital received through M&A or IPO exits (a dollar ratio of three to one)