Given Imaging ponders its future

Shiri Habib-Valdhorn

Nochi Dankner's liquidity needs may spell the end of the road as an independent company.

Is Given Imaging Ltd. (Nasdaq: GIVN; TASE: GIVN) coming to the end of the road as an independent company? From a notification released by the company yesterday after the close on Wall Street it emerges that it is examining "strategic options" for enhancing shareholder value. Given Imaging states that it has received "non-binding indications of interest…from a number of parties relating to a possible merger or sale of the company." Following this announcement, the company's share price shot up 14% at today's opening in New York, and it rose in Tel Aviv today too.

Given Imaging has developed a camera in a pill for examining the digestive system. It has a market cap of $472 million. The largest shareholder is Discount Investment Corporation (TASE: DISI) of the IDB Holding Corp. Ltd. (TASE:IDBH) group controlled by Nochi Dankner, which holds 15% of the company directly and another 22% via Elron Electronic Industries Ltd. (TASE: ELRN). In the past it was said that Dankner saw Given Imaging as a company that could reach annual sales of $1 billion, compared with $185-190 million projected for this year, and a target of $450 million in 2016.

However, in the light of the IDB group's liquidity needs, it would seem that Given Imaging too has been put up for sale. At its peak, in 2004, it had a market cap of $1.2 billion. A sale now, if it happens, will not bring anything like that amount, but there will be a premium over the current market cap.

Given Imaging's PillCam SB for examining the small bowel sells well, but the company's growth potential in this market is not large. The big potential lies in the PillCam Colon for examining the large intestine. The company is currently making initial progress with this device. It is close to approval in Japan, and in the US, the company is due to start discussion on approval with the Food and Drug Administration (FDA), although only as a secondary examination tool.

Its progress in the marketplace has led to increase interest in the company. Potential buyers are large medical device companies. Names that have cropped up in the past include Boston Scientific and Johnson & Johnson, and its Japanese competitor Olympus is also a possibility. Alternatively, the buyer could be a private equity fund. Given Imaging has hired Barclays Bank to assist it in the process of enhancing shareholder value.

Companies do not generally rush to report talks on an acquisition, but Given Imaging chose to do so. It could be that it is thereby officially putting itself up for sale, and inviting more players to bid. On the other hand, it is by no means certain that "non-binding indications of interest" will mature into a deal. Given Imaging states in its announcement that the possibility of a strategic partnership is also being examined, as is the possibility that it will itself continue to make acquisitions. In recent years, Given Imaging has grown through the acquisition of Sierra Scientific Instruments and of a line of products from Medtronic. It recently bought the assets of US company SmartPill for $6 million.

Published by Globes [online], Israel business news - www.globes-online.com - on October 18, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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