Syneron seeks buyer for $322m

Shimon Eckhouse

Apax Partners is among those interested in the Israeli esthetic medicine company.

Israeli esthetic medicine company Syneron Medical Ltd. (Nasdaq: ELOS) is looking for a buyer. The company has hired Barclays Investment Bank for the task, and Apax Partners is among those interested. Syneron's market cap is $322 million. The company's share price climbed 10% over the past year, but it is still far from the peak it reached more than a decade ago.

It cannot be ruled out that the company will be sold at a price close to $400 million.

The hoped-for acquisition follows the acquisition of two of Syneron's main Israeli competitors, Lumenis and Alma Lasers. Alma Lasers, a private company was sold to China's Fosun Pharma for $240 million, and Lumenis was sold to private equity fund XIO Group for $510 million at a 16% premium on the company's market price at the time.

Return to profitability

Syneron posted $277 million in revenue in 2015 and $215 million in the first nine months of 2016. The company's main problem lies in its profit line. The company formerly made good profits, but posted a $6.4 million loss in 2015, following losses in the preceding years. Syneron made a $1.1 million profit in the first nine months of 2016, with $71 million in revenue in the third quarter, up 15.3%, $24 million of which was accounted for by new products, a 61% increase. Half of the revenue from new products came from a product obtained through the acquisition of Israeli company UltraShape.

Syneron recently obtained approval for its product for treatment of cellulitis, a product regarded as the company's growth engine. Syneron, which has $82 million in cash, is scheduled to publish its annual financial statements in two days. Syneron was founded by Dr. Shimon Eckhouse after he was ousted from Lumenis, which he also founded, by a hostile takeover.

Syneron overtook Lumenis in performance in the 1990s, after which the two companies competed head-to-head while having similar Nasdaq market caps. Lumenis also developed in the direction of the non-esthetic medical market, based on its laser and energy technology. Syneron expanded into other esthetic areas, primarily through acquisitions.

CEO Amit Meridor manages Syneron, while Eckhouse serves as chairman and owns a 7% stake in the company.

Esthetic market no longer Israeli

The medical esthetic market, which has been dominated by Israeli companies since its 1990s boom, is moving into non-Israeli hands (although the Israeli companies are still active). Considerable consolidation has taken place in the field in recent years, with the non-Israeli companies also being acquired or merged - for example Candela, acquired by Syneron itself.

The consolidation process has been spurred by saturation in the core business of esthetic medicine (in hair removal, for example) and intense competition. The past quarter's 51% gross profit margins are nowhere near the margins of 80% or more when the esthetic market began. Non-Israeli competitors have also arisen, such as Cynosure and Lutronic. Younger and smaller companies still remain in Israel, such as EndyMed, Venus Concept, and PerfAction.

Published by Globes [online], Israel Business News - www.globes-online.com - on February 13, 2017

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

Shimon Eckhouse
Shimon Eckhouse
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