The deal for the acquisition of a controlling interest in Israeli company Vonetize (TASE: VNTZ) by US cinema and television company Desilu Studios has been called off, Vonetize notified the TASE yesterday.
Vonetize, which develops and distributes a video on demand (VOD) content platform and multichannel television, reported that its controlling shareholders, CEO Noam Josephides (29%), CTO Oren Levy (10.2%) and director Dean Salomon (13.5%), had notified Desilu of the deal's immediate cancelation. Desilu is a small studio in Los Angeles headed by billionaire Charles Hensley.
According to Vonetize's notice to the stock exchange, its controlling shareholders canceled the deal following a series of delays and postponements by Desilu in recent months. The US media reported on October 31 that US network CBS had begun legal proceedings against Desilu in a California court (the proceedings are not related the sale of shares by Vonetize's controlling shareholders).
In view of the serious allegations against Desilu and its controlling shareholder reported in the media and described in the legal proceedings, the Vonetize controlling shareholders decided against adding Desilu as a major shareholder in Vonetize, and said that they were considering a claim against Desilu for damage caused them, including realizing the securities and guarantees provided for execution of the deal.
Under the agreement between Vonetize and Desilu, Desilu was to have acquired a controlling interest in Vonetize from Josephides, Levy, and Salomon in several stages at a valuation of $50 million, eight times Vonetize's current market cap. Vonetize's share price was up 2% yesterday, boosting its market cap to NIS 28 million.
Vonetize finished the first half of 2018 with a $2.9 million operating loss and a $3.8 million net loss on $745,000 in revenue. The company had only $426,000 in cash as of the end of June.
Published by Globes, Israel business news - en.globes.co.il - on November 5, 2018
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