Memco, which engages in data security for organizations, has signed a merger agreement with US giant Platinum. The value of the transaction is $500 million, compared to the $380 million market value which Memco is currently traded on NASDAQ.
The transaction will be concluded in a pooling of interests share swap. The merger was approved by the boards of directors of the two companies, with its completion expected at the beginning of next year. The broker in the deal was US Investment Bank Lehman Brothers, which issued the company on Wall Street two years ago.
Memco was issued on Wall Street in October 1996 at a company value of $190 million, and soared on its first day of trading to a market value of $285 million. Afterwards it even reached a market value of $500 million, before it was cut down in May 1998, following disappointing financial results posted in 1998’s first quarter.
Over these past few days, a recovery in the share was noted against the backdrop of improvements presented by the company in its Q2 reports. Recently, Memco acquired two companies - Abir Net of Israel and Network Information Technology of the US, and one off expenses posted due to the acquisitions brought it to a net loss in the last quarter. Net of this one off expense, the company posted a net profit of $1.7 million, more than analysts’ forecasts. What is more significant is the growth in the company’s revenues, which soared 27% this quarter.
Memco’s access and authentication systems are designated for a client-server environment and they constitute part of a security software system used by companies like Motorola, Texas Instruments and Macdonell Douglas, who all rank as Memco customers.
In contrast to Check Point’s products, which safeguard organizations’ databases against the outside environment, Memco’s products are designated to protect the organizations’ internal environment.
Even prior to this present acquisition, Platinum cooperated with Memco. Platinum has previously marketed Memco’s products, and in 1995, even purchased 10% of the company’s shares based on a company value of $50 million.
Additional company shareholders include Ophir Holdings, owned by Poalim Investments and Ampal, which hold 9.7% shares in the company,
and the company’s two founders Israel Mazin and Eli Mashiach each hold 16% in company shares.
Published by Israel's Business Arena August 13, 1998.