Three weeks ago, "Globes" asked if Noam Lanir might sell his controlling interest in translation software developer Babylon Ltd. (TASE:BBYL). It now turns out that some of the people who sold him their shares in the company two years ago, at what has turned to be a bargain price, now want to exercise their call option that Lanir gave them to buy back shares at double the price.
In 2007, Lanir bought the 33.24% controlling interest in Babylon through Chanpak Management Ltd. at NIS 3 per share from Monitin Publishing Ltd., Formula Vision Technologies Ltd. (TASE: FVT) and Kardan Technologies Ltd. (TASE:KRTC) (the latter two through a limited partnership). He gave the sellers an option to buy back half the shares they sold at NIS 6 per share. If the sellers exercise the option, but Lanir wants to keep the shares, he undertook to pay the sellers an additional NIS 4 for each share covered by the agreement.
The option expires on January 3, 2010. Sources inform ''Globes'' that Kardan Technologies, jointly controlled by Kardan NV (TASE: KRNV;AEX:KARD) and Benny Steinmetz, is considering exercising its option in one way or another.
Kardan Technologies CEO Eitan Rechter had considered buying Babylon shares on the market for less than NIS 6 per share, but decided against it. He also asked Lanir to extend the option, but Lanir refused. Three weeks ago, Rechter recruited David Assia, a director at both Bablyon and Kardan Technologies, and founder and former CEO of Magic Software Enterprises Ltd. (Nasdaq: MGIC; TASE: MGIC), to find partners to help him exercise the option, and who would stay as strategic or financial partners in the firm.
Assia contacted a number of persons in the Israeli market, including Zvi Barinboim (who last month acquired Industrial Development Bank of Israel Ltd (TASE:IND) through BGI Investments (1961) Ltd. (TASE: BGI)), and IncrediMail Ltd. (Nasdaq:MAIL: TASE:MAIL) CEO Ofer Adler, both of whom said no, saying, "If Lanir doesn’t stay at Babylon, I won't invest in it."
Lanir reportedly told Rechter and Assia that if Kardan Technologies exercises its option, he had no interest in being a minority shareholder in Babylon, and that he didn’t want to risk a struggle for control. He would therefore consider selling his entire stake. Lanir would make a capital gain of NIS 42 million on such a sale.
Kardan Technologies' efforts to boost its Babylon stake, drew the attention of another shareholder, global publisher Reed Elsevier plc (LSE: REL; NYSE: RUK), which owns 20.3% of the company. Reed Elsevier was reportedly pleased by Lanir's investment in Babylon, and wants him to continue leading the company. Reed Elsevier is reportedly displeased by Assia's actions on behalf of Rechter, since Assia represents Reed Elsevier on Babylon's board. Reed Elsevier is therefore reviewing its relationship with him.
Lanir declined to comment on the report. Rechter said in response, "Kardan Technologies has not yet made any decision on the matter."
Babylon's share fell 1.2% in early trading today to NIS 5.61, giving a market cap of NIS 42 million.
Monitin Publishing is the parent company of "Globes".
Published by Globes [online], Israel business news - www.globes-online.com - on December 9, 2009
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