Ophthalmic treatment company BioLight Israeli Life Sciences Investments Ltd. (TASE:BOLT) has signed a non-binding memorandum of understanding with a Chinese investment fund. The fund will buy the public's holdings in the Israeli company and delist it. If the acquisition goes ahead, it will be at NIS 16.5 per share, representing a premium of 83% on the company's base share price this morning. The share price is currently up 45%, giving BioLight a market cap of NIS 13.6 million.
It should be pointed out that there is no binding agreement. The price, and the entire deal, are subject to due diligence. BioLight said that it estimated that the negotiations could continue for several more weeks.
BioLight has been seeking to commercialize some of its products in the past year, but it was asked to desist from contacts with third parties during the negotiations with the fund, which began in November. The company said today that this condition would shortly expire, perhaps indicating that it is still not certain that the deal with the fund will go ahead, and that it is going back to examining alternatives.
If a deal does take place, the fund will hold 45% of BioLight, for a payment of $5.1 million. The fund will then invest $5-7 million on the same terms and will become the controlling shareholder, but by then BiolIght will be a privately held company and the additional investment will not affect the investing public.
"Product cluster" vision
Former Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) CEO Israel Makov became the controlling shareholder in the stagnating biomed company in 2011. He wanted to use BioLight to realize his vision of "product clusters". According to this vision, Israeli biomed startups can best develop if synergy between them is built in at all stages of the development process: product development, regulation, finance, market research, and marketing. Makov (together with CEO Susana Nahum Zilberberg) assembled two such clusters. He leveraged a glaucoma surgery product, one of BioLight's long-standing technologies, and assembled a cluster of ophthalmology drugs around it. BioLight also acquired a 48% controlling share in Micromedic, a listed diagnostic company, which formerly served as a cluster in cancer diagnosis. The experiment was partly successful. BioLight's products have not yet been commercialized, and have therefore also not attained a value that the shareholders in Tel Aviv could relate to. Perhaps for this reason, the company share has gradually faded in recent years, and lost 72% of its value over the past year. BioLight sought to make an offering to the public last March, but could not complete it at the prices it wanted. That was also one of the reasons why its share price plummeted.
Nahum Zilberberg said, "The stock exchange was good to us for many years, but at the current valuation, it is logical to consider an investment like the one proposed to us. The product cluster vision is working in the company on a day-to-day basis. There is no connection between the vision and its reflection in the share price."
Published by Globes [online], Israel business news - www.globes-online.com - on December 29, 2016
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