Insightec cuts SPAC merger valuation

Insightec device Photo: PR
Insightec device Photo: PR

Elbit Medical, a shareholder in the Israeli medical device company, reports that if the merger goes ahead it will be at a lower valuation than previously reported.

Israeli medical device company Insightec is the latest company to fall 'victim' to the weakness on the SPAC merger market on Wall Street. The company reported in October that it was in talks for a SPAC merger at a company valuation of $2 billion. Today, Elbit Medical (TASE: EMTC), which has a 3.1% stake in Insightec, notified the Tel Aviv Stock Exchange (TASE) that due to the market conditions, if the merger goes ahead, it will be at a lower valuation than reported in October. No further details were disclosed. Insightec has developed a device for minimally invasive surgery based on ultrasound.

Special purpose acquisition companies (SPAC) are blank check companies that raise money on the stock market in order to merge with an existing company, within a specific period of time. The SPAC merger trend was red-hot in the first half of 2021 with more than a dozen Israeli companies agreeing such mergers. But the trend has since waned with disappointment at the market performance of the companies and tougher regulatory requirements from the US Security Exchange Commission (SEC).

Only last week, Israeli trading platform eToro reported that it had agreed to cut the valuation of its planned SPAC merger by 15% to $8.4 billion, after money. Other Israeli companies waiting to complete their SPAC mergers are Gett (formerly Get Taxi) and fintech company Pagaya.

Insightec was founded in 1999 and has developed and markets a non-invasive system for using focused MRI-guided ultrasound waves to destroy tissue, for treatment of non-Parkinson tremors, and to clear "blood-brain blockage" and tumors.

Insightec is controlled by US company Koch Disruptive Technologies (KDT), which has invested an overall $200 million for a 40% stake. In 2020, KDT led a $136 million financing round at a $1.3 billion valuation. In May 2021, Insightec's second largest shareholder York Capital sold its 7% stake at a company valuation of $1 billion to Peregrine Ventures and Israeli institutional investors Leumi Partners and Mor Investments. York remains with a 13% stake. Elbit Medical, once a dominant investor in the company, has sold most of its shares and remains with a 3.1% stake.

Insightec has recently received two important FDA clearances, in treating Parkinson's disease and prostate growths, which paves the way for future marketing possibilities. The company tends to see its revenue grow from quarter to quarter but still reports large losses.

Published by Globes, Israel business news - en.globes.co.il - on January 4, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Insightec device Photo: PR
Insightec device Photo: PR
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