Analyst Marks Six Public Israeli Tech Companies as Prospective M&A Targets

Analyst Marks Six Public Israeli Tech Companies as Prospective M&A Targets

The Israeli market has seen at least four acquisitions valued at over $1 billion in 2018, making for an unusual year. Which company comes next?

Dror Reich  :  2018-11-08T12:55:11..
The Israeli market has seen at least four acquisitions valued at over $1 billion in 2018, making for an unusual year. Based on the analysis of these deals, investment house Oppenheimer & Co. spotted six public Israeli tech companies that can be a target for future acquisitions. The analysis was published late in October by Sergey Vastchenok, managing director at Oppenheimer.

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In July, Nasdaq-listed KLA-Tencor Corporation announced the shareholders of Nasdaq-listed Orbotech Ltd., a manufacturer of testing machines for electronic parts, have approved its acquisition by the former. The deal, which values Orbotech at $3.4 billion, is expected to close by the end of the year.

Wix. Photo: PR Wix. Photo: PR Wix. Photo: PR

In August, PepsiCo Inc. announced the $3.2 billion in cash acquisition of Israeli at-home water carbonation products company SodaStream International Ltd. The acquisition is expected to close by January 2019.

In September, Medtronic Plc announced it will acquire Israel-based surgical robotics company Mazor Robotics Ltd. in a deal valuing the former at $1.64 billion.

In October, technology investment firm Thoma Bravo LLC announced the acquisition of Nasdaq-listed information security company Imperva Inc. Thoma Bravo will pay around $2.1 billion in cash.

All four acquisitions were in the $1 billion to $5 billion range, meaning the buyers could use their free cash flow to finance the deal without needing to raise a major outside investment, and all presented a revenue growth rate of over 10%, paired with their high gross profit margin, which can add to the bottom line of buyers, Vastchenok explained in an interview with Calcalist.

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The six Israeli companies the analysis singled out as potential targets for acquisitions are Nasdaq-listed Website-building company Wix.com; Nasdaq-listed information security company CyberArk Software Ltd.; Nasdaq-listed software company Varonis Systems Ltd.; Nasdaq-listed Information security company ForeScout Technologies Inc.; Nasdaq-listed smart energy company SolarEdge Technologies Inc.; and Nasdaq-listed cybersecurity company Radware Ltd.

Mellanox was also mentioned favorably.

On Wednesday, CNBC reported that American semiconductor manufacturer Xilink Inc. has hired Barclays as an advisor on a bid to acquire Nasdaq-listed Israeli chipmaker Mellanox Technologies Ltd. The report followed an October report by that news agency, which stated that Mellanox has hired a financial advisor in response to takeover interest. Mellanox was also mentioned favorably by Vastchenok.
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