Argus investors, employees win big in $430m acquisition

Argus employees Photo: David Garb
Argus employees Photo: David Garb

Investors will receive 12.6 times their investment and employees will earn big bonuses as Continental buys the Israeli car cybersecurity company.

The Argus Cyber Security exit is one of the most profitable for investors in the Israeli auto-tech sector and high tech in general in recent years, according to figures obtained by "Globes." The final deal was signed in euros; while the price for the company in dollars according to the current euro-dollar rate of exchange is $430 million.

$50 million of this price, which was allocated to bonuses for managers and employees, will be spread over a number of years. The remaining $380 million will go to the company's entrepreneurs and shareholders.

Taking into account the fact that $30 million has been invested in the company since it was founded in 2014, the investors are receiving $12.60 for each dollar invested in a span of just two years.

The company raised only $4 million in its first financing round in April 2014. Investors in this round included Magma Venture Partners, Vertex Venture Capital, Zohar Zisapel, and a number of auto importers, one of whom was Gil Agmon, who subsequently joined Argus's advisory board.

Argus held its main financing round in September 2015, in which it raised $26 million, led by systems provider Magna International, which is incidentally one of Argus's main international competitors; Continental; German insurance company Allianz SE; and Japanese financial corporation SBI. The company's core investors also participated in the round, including Zisapel, entrepreneur Eyal Gur, and Magma and Vertex.

Cyber sector sources said that Allianz was a candidate for additional strategic deals in the sector. In an article published this month in Germany, senior Alliance figures cited cybersecurity as strategic and essential for advancement in the smart car segment.

Argus has ongoing cooperation in cyber security for vehicles, which began in 2016. It is not clear what will happen to this partnership, but sources in the sector believe that Check Point Software Technologies Ltd. (Nasdaq: CHKP) is likely to consider entering the cybersecurity for vehicles sector independently through an acquisition of existing players, or by investing in the field itself.

There is still strong demand in the global auto industry for companies in the cybersecurity for vehicles sector, in view of the current campaign by regulators in the US and Europe to require the installing of cyber protection in vehicles and vehicle components.

Argus stated, "Things remain as they were before, and we are honoring every agreement with every customer and partner. The acquiring company is Elektrobit, a subsidiary of Continental, which independently supplies and develops components, and is a services contractor with customers throughout the auto industry, not just Continental, its parent company."

The company declined to respond to the figures published in the report.

Published by Globes [online], Israel Business News - - on November 5, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Argus employees Photo: David Garb
Argus employees Photo: David Garb
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018