The US company, Harmonic Lightwaves, has finally closed the deal to acquire all the shares of the Israeli start-up company, New-Media Communication, that specialises in the field of data communications. The deal will take the form of a share swap, where the US company will give New Media shareholders 1.04% of its shares. Since the current price of Harmonic Lightwaves stood yesterday at some $12 per share, the deal will value New-Media at $12.5 million.
The agreement in principle was announced back in September ’97, when the price of the US company’s shares stood at $17.5, reflecting a value for New-Media of $18.2 million. However, over the last three months Harmonic Lightwaves share value has declined, and with it the amount that New-Media shareholders will receive.
IES Industries, which is traded on TASE, is a shareholder of New-Media. On the eve of the deal IES holds 22.5% of New-Media’s shares, for which it will receive 233,000 Harmonic Lightwaves shares worth some $2.8 million (NIS 9.9 million). The assessment is that in IES’s first quarter ’98 report nearly all the proceed will be recorded as a capital gain since, because of New-Media’s losses, the IES investment in the company will be almost completely cancelled out.
At present New-Media employs some 20 people and is involved in the development of data transfer technology over wide band communication systems. For instance, over cable television networks, satellite communications and Internet. The speed of data transfer through the company’s products is significantly faster than the normal speed today through standard modems, as well as that characterising satellite networks.
The acquiring company, Harmonic Lightwaves, develops and markets communications equipment in the fibre optic sector, particularly for cable television companies. The company is expected to end ’97 on an income of $80 million, and a net profit of $10 million.
IES Industries is developing a multimedia type of target shooting trainer, and markets electronic components, but these activities brought losses over recent years. IES mainly profited through high-tech investments that it successfully realised.
Published by Israel's Business Arena January 7, 1998