The terrorist attacks in Jordan were what weakened the indices, but they weren’t the only factor. The steep drop in bonds yesterday and the fall in the Google (Nasdaq: GOOG) also had an effect. But look at the bright side. Despite all these negative things, the market gained ground, and Saifun Semiconductors Ltd. (Nasdaq: SFUN) is bringing a lot of new money to Israel.
Saifun held its IPO yesterday, after a gestation period of over nine months. The company provides solutions for intellectual property relating to flash memory chips. Saifun does two things: it puts more memory on the chip, and it does it more simply. That’s the explanation in English; I really hope that Saifun’s scientists don’t find it insulting.
Saifun chairman and CEO Boaz Eitan is both the man who makes the company go, and the one who invented its technology. Eitan holds dozens of patents, and his resume is amazing. If, as it seems, he’s also a good manager, then it’s really worthwhile to buy the share. Kobi Rozengarten is company president. He’s another man of whom every Jewish mother would be proud. Really. He used to work at Kulicke and Soffa Industries and Elbit Systems (Nasdaq: ESLT; TASE: ESLT). The company was founded in 1997, and now, only eight years later, its market cap is $650 million. Check how long it took Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) to reach a value like that. I see that Kenneth Levy, who founded electrical appliances giant KLA-Tencor (Nasdaq: KLAC) and serves as chairman of PowerDsine (Nasdaq: PDSN), is on the board of directors.
Getting down to brass tacks, the share closed at $35.30, compared with an issue price of $23.50. The company was thinking about an issue at $20.50-22.50 per share. This means that Saifun, after deducting all its expenses, will take home over $100 million today, and another $17 million next month, after the underwriters finish selling the shares from their green shoe option, which they are entitled to do if the share rises by the end of trading on its first day.
It turns out that the public’s appetite for technology dreams is just as great as it was at the end of the previous millennium.
Good old Magic Software Enterprises (Nasdaq: MGIC; TASE: MGIC) suddenly changed direction, and has risen over 22% this month. Magic is the oldest Israeli company on Nasdaq. I’ve noticed something interesting about Magic on Wall Street; every time company founder David Assia comes back to lead the company, the share rises. True, he always returns when the company is in trouble and asks him to come and rescue it. He comes, fixes things, and leaves, and the same thing happens all over again. If we look at what has happened at this company since early 2004, it looks like nothing has happened, so the share has been going down since then.
A little bird whispered to me that Assia was coming back to manage the company. I heard the rumor at the end of October, and my conclusion is therefore that the same thing was whispered to some people willing to take a chance, and bet on David again.
Magic integrates software, and is considered a leader in the field. There is potential there, but Formula Systems (Nasdaq: FORTY; TASE: FORT) is also there as a key shareholder, and, in my opinion, if Assia does return, and he is very familiar with Wall Street, its customs, and what they like there, he’ll have a hard time disassociating Magic from Formula’s image. That’s how it looks to me.
I don’t want to talk about Teva’s report, or the record price that the share has reached. Serono (NYSE: SRA; SWX: SEO), a leading biotechnology company from Switzerland, makes the famous Rebif anti-multiple sclerosis drug, which was supposed to have wiped out Teva’s Copaxone. Serono has confirmed that it is negotiating its acquisition with several giant companies. The names being mentioned are Novartis Pharmaceuticals (NYSE: NVS; LSE: NOV; SWX: NOVZ) of Switzerland, a major competitor of Teva in the generic field; British giant GlaxoSmithKline (NYSE, LSE: GSK); Sanofi-Aventis; and Pfizer (NYSE: PFE).
Serono confirmed these names as candidates for acquiring it. I’ve no doubt that Teva president and CEO Israel Makov, who in effect caused Serono to buy the company he personally built, InterPharm Laboratories (which developed Rebif), and who knows the Bertarelli family (the Serono controlling shareholders), is well briefed in all the particulars. Acquiring Serono, whose estimated value is $1.5 billion, would make give Teva control of the market for treatment of multiple sclerosis, plus an entry into the realm of biotechnology, which Teva has in any case been eying. If you ask me, I’m betting that Teva will buy. Serono’s corporate culture is also suitable.
Published by Globes [online] - www.globes.co.il - on November 10, 2005