Dead Sea Laboratories Ltd., the maker of Ahava branch cosmetics has postponed its planned IPO on London’s Alternative Investment Market (AIM). The company planned to raise $22 million at a company value of at least $60 million, before money. The company said that it would not go ahead with the offering at a lower value.
Dead Sea Laboratories CEO Yaacov Ellis said, “Ahava is undergoing rapid development, with excellent business results. There is no reason for the company to compromise because of the market conditions in the US or UK. Postponing the IPO will enable the company to maximize its value at a better time on the market.”
Ellis presumably knows his company well, but his statement raises questions about his flexibility vis-a-vis the markets, not only regarding this attempt at an IPO, but also for the next try.
Firstly, “market conditions in the US or UK” as Ellis put it, are not so sensitive that it is impossible to carry off a small to mid-sized offering, such as Dead Sea Laboratories’ IPO. This is even truer in the case of a company with “excellent business results” as Ellis claims. Secondly, an IPO at a time that “will maximize the value of the company” is not always an offering that creates value for investors who rush to buy shares, at least in the short term.
Ellis said, “We are under no pressure to hold the IPO, and when we hold it, it’s important to us that we get the value that we think we deserve.”
Published by Globes [online], Israel business news - www.globes.co.il - on October 24, 2007
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