The sale of capsule imaging company Given Imaging to Covidien for almost $1 billion was completed in early 2014. Since that time, Covidien itself was sold in a huge deal to Medtronic, but its acquisition of Given Imaging continues to affect the reports of technology holding company Elron Electronic Industries Ltd. (TASE: ELRN), which formerly owned a quarter of Given Imaging's shares.
Elron finished 2014 with an $85.5 million net profit attributed to its shareholders, five times its 2013 profit, which was also influenced somewhat by the sale of Given Imaging. Elron recognized a $144 million profit on the sale of Given Imaging in 2014 ($107 million net of tax). The effect of the deal fell in the first quarter, while Elron made losses in the three following quarters, including an $8.1 million loss on the fourth quarter.
Managed by CEO Ari Bronshtein, Elron is traded at a NIS 535 million market cap. The Given Imaging deal is still also having an effect on the remuneration of company executives. Nachum (Homi) Shamir, who managed Given Imaging, had the highest salary cost in the Elron group in 2014: $4.6 million (over NIS 18 million) for two months in early 2014, before the sale was completed.
Most of the remuneration consists of a $3.2 million bonus relating to his contribution to the sale and payment based on shares ($1.3 million) relating to the termination of his employment at the company when the deal was completed. The next four executives on the list are also Given Imaging personnel, whose salary costs varied between $962,000 and $2 million.
Other factors affecting Elron's 2014 profit were of lesser importance. These included revaluations of Notal Vision (in which Elron has a 21.5% stake), which is developing a device for remote monitoring of age-related macular degeneration patients; Jordan Valley (18.8%), which is developing equipment for controlling production processes in the microelectronic industry; and Aqwise (19.8%), which deals with biological treatment of water and sewage.
Elron posted profits of $1.9 million and $471,000 from a rise in the fair values of Notal Vision and Aqwise, respectively, and a $1.4 million loss from a decline in the fair value of Jordan Valley.
Published by Globes [online], Israel business news - www.globes-online.com - on March 12, 2015
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