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WhiteSmoke merges with TASE shell

21 Oct, 2012 14:59
שלח תגובה במיילTali Tsipori

The English grammar and composition correction company made a reverse merger with TASE shell Eldan Tech.

English grammar and composition correction company WhiteSmoke Inc. has made a reverse merger with TASE shell Eldan Tech Ltd. (TASE:ELDN), following the failure of its Nasdaq IPO last year, enabling its continued existing in the face of financial problems and the departure of its founders.

In the reverse merger, Eldan Tech, controlled by Ronny Peled and Eliahu Zamir, will allot 84.5% of its shares to WhiteSmoke shareholders. Eldan Tech set up a company in Delaware for the purpose of the reverse merger, which will absorb WhiteSmoke's activity. WhiteSmoke will become a wholly-owned subsidiary of Eldan Tech and cease to exist.

WhiteSmoke's valuation for the reverse merger was $21 million, well below its value of $37 million for the Nasdaq IPO, in which it sought to raise $17 million. The IPO failed, due to the inclement primary market and the company's poor financial results.

Eldan Tech has a market cap of NIS 579,000, after it sold all its holdings in real estate and Rilon Ltd. (TASE:RLN), which collapsed under cash flow problems and debts, including to bondholders, of tens of millions of shekels.

WhiteSmoke's founders, couple Hilla Ovil-Brenner and Liran Brenner, owned 15.8% of the company, Evolution Venture Capital, its largest shareholder, owned 30.3%, and serial Yair Goldfinger owned 7.5%. The Brenners recently left the company, although they remain shareholders. Eldan Tech announced that Itay Meroz, who succeeded Hilla Ovil-Brenner as CEO, will keep his job.

WhiteSmoke's leading product, WhiteSmoke Writer corrects grammar, spelling, and style errors in English business, high-tech, biotech and other texts, and includes a multilingual dictionary. The software is adaptable for different programs. It is designed for native English speakers rather than for learners of the language. The software was the company's initial primary source of revenue, but ahead of the planned IPO, the company was earning revenue from its joint search application with Google Inc. (Nasdaq: GOOG).

Published by Globes [online], Israel business news - www.globes-online.com - on October 21, 2012

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

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