American company Terayon, controlled by brothers Zaki and Shlomo Rakib, is negotiating for the acquisition of Israeli communications company Telegate, currently controlled by ECI and Aryt, in a share exchange transaction, Globes has learned. According to estimates, the value of Telegate in the transaction is at least $100 million.
Terayon, traded on Wall Street at a value of approximately $1 billion, produces modems for rapid internet cable communication. In July, Terayon acquired the American company Immedia from a group of shareholders headed by Efi Arazi.
Telegate Chairman Yoram Oron refused comment on details of the transaction. He stated today (Wednesday) "The amount of Telegate’s orders has significantly increased lately, and the company must prepare financially for them."
Telegate develops systems for telephony transmission and data communications using cable television networks. Since its founding in 1993, the company has had losses of NIS 81 million. The company signed its first significant agreement, for the supply of its systems through ECI, to Belgian cable company Telent, which operates in Northern Belgium, in 1997.
The general value of the agreement in Belgium is likely to reach $100 million. According to Telegate’s forecasts, sales this year will reach NIS 40 million (NIS 11 million during January-June), and within a year will greatly increase.
Telegate has recently made two private placements. Last week, Telegate announced a private placement for $6.5 million to the Japanese investment bank Nomura at a value of $40 million. The company issued shares for $11.5 million to an investment group organized by Giza in July.
Published by Israel's Business Arena October 6, 1999