Eltek leaves Maiman wistful

The company has doubled its value in the month since Yossi Maiman closed the sale of his stake.

Yosef (Yossi) Maiman must have looked wistfully at Thursday's trading in Eltek Ltd. (Nasdaq: ELTK). Over the past five years, the Petah Tikva-based producer of flex and flex rigid circuit boards, which, until recently, Maiman controlled, has had a market cap that ranged between $7 million and $10 million, below the radar of most Wall Street investors.

On Wednesday, Eltek released its third quarter financials, showing an 18.5% rise in revenue in comparison with the corresponding quarter to a record $12.8 million. The company's net profit more than quadrupled to $585,000.

The response of Wall Street investors, who had scented change in the air even before the financials were published, was sharp. Eltek's share price shot up 50% on a huge volume of $40 million, the highest daily volume in the stock since 2005. This completed a 107% rise in the share price in three sessions. The stock corrected somewhat on Friday, to $2.73, but the market cap of $18.05 million is still nearly double the valuation at which Maiman sold his shares in Eltek a month ago.

Maiman was forced to sell his shares after the collapse of Ampal, his main holding, which left a huge debt to bondholders of NIS 900 million. Maiman bought his holding in Eltek in 1988 from Elbit and Koor. After he tried for a long time to sell the company, a buyer was found: Nistec Ltd., owned by Yitzhak Nissan, which invested in the company in exchange for an allotment of shares.

In a deal signed in August and completed at the beginning of this month, Nistec injected $4.2 million into Eltek and bought Maiman's 24.1% stake at $1.45 per share. At the time that the deal was signed, this represented an 18% premium over the market price, and Maiman received $2.3 million for his shares.

It is true that the rise in Eltek's share price is in part attributable to the very fact that Nistec invested in the company, and to the potential for Eltek from synergies between the two companies, but Maiman surely did not expect that, after years of treading water, Eltek would double its value within a month of the closure of the sale agreement.

Published by Globes [online], Israel business news - www.globes-online.com - on December 1, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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