Five years after its IPO on the Tel Aviv Stock Exchange, telecommunications equipment manufacturer Telrad Networks is being sold at a valuation below that in the IPO. Liquid Intelligent Technologies is buying Telrad for NIS 199 million, which is more than its market cap before the deal was reported - NIS 157 million - but, as mentioned, less than its post-money valuation in its IPO in 2017, which was NIS 340 million. With the addition of options awarded to Telrad employees, the value of the deal comes to NIS 207 million. The deal is subject to approval by Telrad's shareholders and also to regulatory approvals.
Telrad's share price rose 18% this morning to NIS 3.53 after news of teh deal was released.
After the IPO, at NIS 6.5 per share in May 2017, Telrad's share price rose to a peak of NIS 6.7, giving a market cap of NIS 345 million, in July 2017, but fell to a low of NIS 0.51 in March 2020. It has recently been traded at around NIS 3.
Liquid Intelligent Technologies is active in telecommunications, data centers, cyber, and cloud services in fifteen countries in Africa, mainly sub-Saharan Africa. The company was founded in 2005 and has positioned itself as a telecommunications infrastructure provider throughout the African continent. Telrad, which was founded in 1951, has three main areas of business, through its subsidiaries: provision of products, solutions and services to telecommunications operators; telecommunications infrastructure, cyber, and IT; and project management and digital mapping services. Liquid Intelligent Technologies will buy Telrad outright and turn it into a privately-held company.
Telrad's main current shareholders are private equity firm Fortissimo (41%), Phoenix Holdings (6.1%) and Excellence (2.9%).
Telrad chairperson and Fortissimo managing partner Yuval Cohen said, "Telrad today is a growing company that has been profitable over the years and that has a large orders backlog for the coming years. The link-up with Liquid Intelligent Technologies, a substantial international group, will secure the company's expansion in Israel as an important technological center for the entire group, and it penetration into new markets and new customers in the coming years."
Telrad's CEO for the past three years has been Moti Elmaliach, formerly CEO of Bezeq International. The company says that Elmaliach led a restructuring of Telrad and put it onto a path of growth and profitability, and that the price in the acquisition deal is 108% higher than the company's market cap when he took up the post.
Telrad's revenue in 2021 was $179 million, 1.2% less than in 2020. The slight decline is attributed to global supply chain problems and a pause in equipment procurement by telecommunications carriers. Only 3% of Telrad's revenue currently comes from Africa, Liquid Intelligent Technologies' main market. Latin America accounts for almost a third of Telrad's sales.
Telrad's net profit in 2021 was $5.5 million, which compares with a net profit of $8.6 million in 2020 and a net loss of $34.5 million in 2019. At the end of 2021 the company had $12.2 million cash.
Telrad was represented in the deal by Discount Capital and Lincoln International, and Adv. Chaim Friedland, Adv. Yair Shiloni and Adv. Ari Fried of Gornitzky, while Liquid Intelligent Technologies was represented by Adv. Shirin Herzog, Adv. Sharon Gazit, and Adv. Judy Amidor of Goldfarb Seligman & Co.
Published by Globes, Israel business news - en.globes.co.il - on May 8, 2022.
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