Last month's acquisition of MTXEPS LLC of the US by retail software developer Retalix Ltd. (Nasdaq: RTLX; TASE: RTLX) was its first acquisition in six years, and apparently whetted its appetite for more. Sources inform ''Globes'' that Retalix is in advanced talks to acquire Formula Vision Technologies Ltd. (TASE: FVT) unit FRSVision Inc. for NIS 20-30 million. Formula Vision owns 55.5% of FRSVision.
FRSVision is the result of a 2006 between Formula Vision portfolio company Formula Retail Solutions Ltd. and Vision Systems, after several years of losses by the latter. Vision Systems, founded in 2002, develops POS software for managing the retail supply chain, sales, service centers, and other solutions for mid-sized businesses in various fields. It focuses on supermarkets and do-it-yourself chains. The merged company has been profitable for two years, posting a net profit of NIS 1.7 million on NIS 16.7 million revenue in 2010.
FRSVision has 900 customers, including Ace Auto Depot Ltd. (TASE:ACDP), New Pharm Drugstores Ltd., the Sonol Israel Ltd. convenience store chain So Good, and the Israeli franchisee of Australia's James Richardson pty Ltd.
Retalix is FRSVision's main competitor in the Israeli market, and the acquisition will remove its main competitor and bring in a long customer list. For this reason, if and when a deal is signed, the Antitrust Authority will have to approve it. There is also another hurdle to overcome.
FRSVision had 43 employees at the end of 2010, and they are worried that after acquiring control, Retalix will transfer FRSVision's customers to Retalix's software and then fire most of them. Consequently, FRSVision's employees recently unionized and asked the Histadrut (General Federation of Labor in Israel) to protect their rights in the event of a takeover by Retalix.
For its part, Retalix said at the start of the negotiations that it would not sign a settlement with FRSVision's employees as part of a deal.
Formula Vision books FRSVision at a value of minus NIS 2.5 million, so if an acquisition deal is signed, it could report a capital gain. A sale would be the second exit for Formula Vision, controlled by chairman and CEO Dan Goldstein, this year following the merger of subsidiaries FIS Software Ltd. and Idit Technologies Ltd. with Sapiens International NV (Nasdaq: SPNS; TASE: SPNS) in a share-swap deal. Formula Vision expects to report a capital gain of NIS 30 million on the sale.
Retalix's share price rose 2.3% at the opening on Nasdaq today to $13.61, giving a market cap of $330 million, after rising 3.2% on the TASE to NIS 49.66. Formula Vision's share price rose 3.4% to NIS 0.36, giving a market cap of NIS 26 million.
Published by Globes [online], Israel business news - www.globes-online.com - on August 22, 2011
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