The wave of technology flotations of 2021 on the Tel Aviv Stock Exchange continues to generate bitter disappointments for investors, as more and more companies that were floated at that time are sold at fractions of the valuations at which they raised money from the public, giving negative returns of 90% or more on the stock.
Last week, it was Continual, which was floated at a post-money valuation of NIS 80 million, and sold its business (software for analyzing and monitoring communications for telcos) to veteran technology company Radcom for just NIS 9 million.
Now it is the turn of Aura Smart Air to be sold. The company, which raised tens of millions of shekels at a pre-money valuation of NIS 130 million is being sold in a share-based deal for NIS 32 million ($8.6 million), about 20% of its IPO valuation.
In an article recently published in "Globes" about the sales of companies that came to the stock exchange in the wave of technology flotations, an experienced underwriter said that "unfortunately, most of the technology companies were not sufficiently mature."
Aura Smart Air developed a smart air purification system, and benefitted from the buzz at the height of the Covid-19 pandemic. The company was founded in 2018 by brothers Aviad and Eldar Shnaiderman, who are the controlling shareholders. Among the investors in the company are Jonathan Kolber and former Azrieli Group CEO Yuval Bronstein, who is chairperson of Aura Smart Air.
Aura Smart Air was floated in Tel Aviv in June 2021 at NIS 6.8 per share. Within a short time, the share price rose to over NIS 10, giving the company a market cap of NIS 248 million. Later on, after the share price had dipped slightly, Aura Smart Air announced positive results in a trial of its device for the prevention of the spread of the airborne Covid-19 virus in closed spaces. Its share price jumped once again, but did not return to its peak. In recent months, the share price has drifted at around NIS 0.40-50, giving the company a market cap of just NIS 11-12 million.
The deal reported by the company is at a substantial premium over the market price. US company Molekule Group (Nasdaq: MKUL), which also produces air purifiers, will buy Aura Smart Air in a share-based deal. Molekule has a market cap of $75 million. Aura Smart Air will become a wholly owned subsidiary and will be delisted from the Tel Aviv Stock Exchange.
For each Aura Smart Air share, shareholders will receive shares in Molekule Group that, at current values, represent consideration of $0.35 per share (NIS 1.28), giving a premium of 183% on the average price of Aura Smart Air shares over the past 30 days, and a discount of 81% on the IPO price less than two years ago. After the merger is completed, existing Aura Smart Air shareholders will hold 10.4% of the shares in Molekule Group.
Aviad Shnaiderman said, "After five years of activity in the Israeli and international markets, we are delighted to join forces with one of the groundbreaking companies in air quality in closed spaces. The merger will give us the ability to realize the full potential of the company and to deepen its activity in existing markets and to expand to additional markets."
In the first half of 2022, Aura Smart Air had revenue of $3.3 million, 48.5% less than in the first half of 2021, and it loss grew 52.6% to $4.3 million.
Published by Globes, Israel business news - en.globes.co.il - on February 27, 2023.
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