from the April 2017 issue

Apax buying Syneron for $400-500m

Israeli esthetic medical products company Syneron has been looking for a buyer for the past two months.

Israeli esthetic medical products company Syneron Medical Ltd. (Nasdaq: ELOS) will be sold to private equity firm Apax Partners for $400-500 million. It was reported in February that Syneron was looking for a buyer, and the company hired the services of Barclays to this end.

Syneron's market cap is currently $366.2 million. It has traded as Syneron Candela since buying US company Candela for $65 million in 2009.

The acquisition comes after Syneron's two main Israeli competitors, Lumenis and Alma Lasers, were sold in the past few years. Privately-held Alma Lasers was sold to China's Fosun Pharma for $240 million, and Lumenis was sold to London based private equity firm XIO for $510 million.

Syneron was founded by Shimon Eckhouse after he was ousted from Lumenis, which he also founded, in a hostile takeover. In the 1990s, Syneron overtook Lumenis in its performance, and from then on the two companies competed head to head, and were traded on Nasdaq at similar market caps. Lumenis is currently managed by Amit Meridor, with Eckhouse, who owns 7% of the company, serving as chairman.

The acquisition of the Israeli esthetic medical company is at a 15% premium on the average closing price in the first quarter. Israeli esthetic medical products company Syneron Medical Ltd. (Nasdaq: ELOS) has confirmed that it is being acquired by private equity advisory firm Apax Partners. Apax will acquire all of the outstanding shares of Syneron for $11 per share in cash in a transaction valued at $397 million. The per share acquisition price represents a 15% premium on Syneron Candela's 90-day volume-weighted average closing price through March 31 2017.

Syneron Candela cofounder and chairman Dr. Shimon Eckhouse said, "This acquisition is a strong recognition of Syneron Candela's leadership in the aesthetic medical device market, its leading world-class technology and unique global footprint. These exceptional assets are a result of the many years of hard work of our skillful and dedicated employees all over the world. We are confident that Apax will add significant value and expertise as Syneron Candela executes on its growth strategy while delivering innovative technologies to our customers and patients. I also believe that this transaction represents a positive outcome for our shareholders."

Apax Partners partner and co-head of healthcare Steven Dyson said, "We have identified the medical aesthetics market as a highly attractive investment area given its long-term growth prospects. Syneron Candela is very well positioned to capture this opportunity, with its highly diversified geographic footprint, broad and market-leading products portfolio, exceptional R&D capabilities and cutting-edge technology. We are looking forward to partnering with the Syneron Candela team to continue its strong growth trajectory, and to seeing the even greater benefits it can deliver for customers and patients."

The transaction is subject to customary closing conditions, including Syneron Candela shareholder approval and the receipt of certain regulatory approvals. The Syneron Candela Board of Directors has unanimously approved the transaction. Subject to standard fiduciary obligations, Dr. Shimon Eckhouse, who owns 7.4% of the company, has entered into a customary voting agreement pursuant to which he has agreed to vote all of his shares in favor of the transaction. There are no financing conditions associated with the transaction. Major Israeli institutional shareholders include Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) Menorah Mivtachim Holdings Ltd. (TASE: MORA) and Yelin Lapidot.

Barclays is acting as exclusive financial advisor to Syneron Candela. Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co. and Morrison & Foerster LLP are serving as legal advisors. J.P. Morgan is serving as financial advisor to Apax Partners and Simpson Thacher & Bartlett LLP and Meitar Liquornik Geva Leshem Tal are serving as legal advisors.

Reprinted from the Israel High-Tech & Investment Report April 2017

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