Flight Medical Innovations Ltd. (TASE: FLGM) president and CEO Michael Burshtine has approached potential investors to set up a group to buy the 67.4% of the company held by Medtechnica Ltd. (TASE: MEDI).
Medtechnica was recently sold to Ilex Medical Ltd. (TASE:ILX). Burshtine will reportedly offer Ilex chairman and CEO Moshe Benshaul $60-70 million for the stake, reflecting a 20% discount on Flight Medical's market cap, but double its shareholders' equity.
Burshtine said, "I don’t comment on rumors."
Ilex Medical declined to comment on the report, but sources close to the company hinted that Benshaul will have to decide what to do. He told "Globes" a few months ago that he greatly appreciated Burshtine and his company and suggested that Flight Medical might acquire the activities of other start-ups for the group.
Both Medtechnica and Ilex market products licensed from other companies, but Flight Medical develops its own products and just embarked on commercial sales. The company expects to continue to lose money for several more years until it wins a market foothold for its new product, but companies like Ilex and Medtechnica have little patience for a steady drain in their profits by new companies that are not fully synergetic with their own operations. This may be why Burshtine is planning a preemptive strike.
Flight Medical posted NIS 24 million revenue in 2010, 20% less than in 2009, and is revenue for the first quarter of 2011 was down 44% from the corresponding quarter to NIS 3.3 million. The company attributes the decline to the switch to its next generation portable ventilator, which is still in development.
Flight Medical's share price was unchanged at NIS 0.32 today, giving a market cap of NIS 93 million.
Published by Globes [online], Israel business news - www.globes-online.com - on May 24, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011