Israeli companies traded in Europe have been the focus of attention of late. Shore Capital Group’s (LSE:SGR) takeover of XTL Biopharmaceuticals (LSE: XTL) is a good example. Yesterday was the turn of CMT Medical Technologies (Nouveau Marche: CMT).
CMT announced that Walt Disney Holding Co.’s (NYSE:DIS) investment arm, Shamrock Holdings, bought 20% of the company for $6 million, at $7.50 a share, a 4% premium over Thursday’s market price. CMT jumped over 10% on Friday to €6.88 (about $8), before the deal was announced, 7% higher than the price Shamrock paid.
Shamrock bought the shares from Paul Capital Partners of the US, which invested in CMT in 1996-99, before its IPO. Following the sale to Shamrock, Paul Capital owns 2% of CMT. CMT’s other shareholders are Nofit Center (19%), and a consortium of Israeli venture capital funds, including Israel Industrial Venture Group and Israel Industrial Resources Fund, (12%). The public owns the remaining shares.
Following the announcement, CMT president and CEO Yossi Katzav said, “We believe that this investment is an impressive vote of confidence by the international fund, which knows the Israeli economy and market well. There is no doubt that the investment will contribute to the company’s growth and prosperity in the coming years.”
Shamrock has other investments in Israel, including Tadiran Communications (TASE:TDCM) and Pele-Phone.
“Globes”: How did the connection with Shamrock come about?
Katzav: “Shamrock has been interested in CMT for a long time. They believe CMT has great growth potential. This isn’t a short-term investment, but a long term one. Shamrock will make further investments in the company, naturally as long as it sees a return on the investment.”
Will Shamrock be a financial or strategic investor?
“Shamrock will not participate in the day-to-day running of CMT, but will be very active at the strategic level.”
Why did Paul Capital sell its holding in CMT?
“Paul Capital is venture capital company with a specific life span. They didn’t intend to hold onto the stake forever. Like every venture capital company, they wanted an exit, and had a successful one. This wasn’t their first exit for CMT. They sold part of their stake during the IPO, posting a profit, and decided to make a second exit now. They nevertheless decided not to sell their whole stake, and still own 2% of CMT.”
Haifa-based CMT develops, manufactures, and markets digital x-ray imaging systems. A group of scientists from Tel Aviv University and Technion - Israel Institute of Technology founded the company in 1981 with the aim of developing high-tech medical devices. The company raised $12 million at €10.90 per share at its IPO in May 1999 on the Nouveau Marche. CMT is currently trading at €6.88, reflecting a market cap of $31 million.
CMT’s products are sold in two main markets worldwide: as add-ons to digitalize analog x-ray rooms; or as an integral component of new x-ray rooms. The add-ons are sold by regional distributors, and the new systems through OEM agreements with Toshiba (LSE:TOS; XETRA:TSBA) and General Electric (NYSE:GE). CMT has been negotiating OEM agreements with other x-ray manufacturers in other countries.
CMT sales in 2002 totaled $19.1 million, 6% less than the $20.3 million in 2001. The company posted a net profit of $4.5 million in 2002, compared with $4.3 million in 2001. Revenue in the first quarter of 2003 totaled $5.2 million, compared with $4.2 million in the fourth quarter of 2002 and $6.3 million in the first quarter. CMT distributed a $1.5 million dividend on its 2002 profit a few weeks ago. The company has $20 million in cash reserves, and has been considering investments in companies with synergetic technologies.
“Nofit Center is owned by Chaya Greenberg, the wife of Shlomo Greenberg, the writer of “Globes” Street Talk column, and a director of CMT.
Published by Globes [online] - www.globes.co.il - on May 19, 2003