Leading communications equipment manufacturer Cisco Systems intends to buy shares in BATM Advanced Communications of Israel, according to the British newspaper "Daily Mail".
BATM shares, traded on the London Stock Exchange, rose 12% on Wednesday following the company's announcement that it would be acquiring Telco Systems for $326 million. BATM shares rose an additional 7% on Thursday.
Telco is a wholly-owned subsidiary of World Access, which is part of the MCI Worldcom group. BATM will pay $200 million in cash, while a further $65.8 million will be paid by issuing 960,000 new ordinary shares to World Access. The remaining $60.8 million will be satisfied by a placing of new ordinary shares for cash.
Apparently, former Prime Minister Benjamin Netanyahu, now a BATM advisor, was not involved in the deal. In answer to a question on the subject, BATM sources said: "Netanyahu was hired primarily for his contacts. In this case, we had many long years of acquaintance with World Access. When we heard they were interested in selling the subsidiary, we made an offer."
BATM designs and manufactures data communications equipment primarily for use in local and wide area networks. The acquisition is intended to expand the company's product line in the Internet infrastructure field, and further establish BATM's presence in the US market, utilizing Telco's customer base.
Telco's sales over than $120 million a year. In the nine months to last September it made pre-tax profits of $17.9 million. Customers include major telecommunications companies MCI, Sprint, Bell Atlantic, Bell South and AT&T.
According to BATM's people, the acquisition will significantly increase turnover to several hundred million dollars. BATM sales in 1999 were $30 million.
BATM is traded on the London Stock Exchange at $2.1 billion value. The share price has increased 2000% over the last year. The company was named Best Technology Company of the Year by the London Stock Exchange in 1998.
Published by Israel's Business Arena on February 3, 2000.