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ERM Bulletin // June 2014
Update: recent trends in Israeli cross-border M&A – more to come?
During the first half of 2014, the trend of major Israeli businesses being acquired by international
investors and strategic buyers has continued. Below is a summary of the major cross-border
mergers and acquisition transactions which have taken place since the beginning of the year.
It is interesting to note that in addition to the usual flow of Israeli start-ups being acquired by major
US and European technology companies, Asian buyers are also becoming prominent players in the
market.
It is widely envisaged that this trend will continue and even increase in the coming months and
years in light of the recently adopted Law for the Promotion of Competition and Reduction of
Concentration, among other reasons. The law is aimed at tackling concentration existing in the
Israeli business market, reducing common control over major financial and non-financial entities and
breaking-up multi-layered (pyramid) structures. For further information about this law and its
anticipated implications, please click here to read out April bulletin on this subject.
Acquisitions of Israeli Companies in 2014
In February 2014, Viber, the Israeli-founded video and voice communications app, was acquired by
Japanese Internet services company Rakuten for $900 million. Rakuten, an e-commerce and
Internet company, operates the largest e-commerce site in Japan, and one of the largest in the
world. Viber, which allows users to make free phone and video calls within its network, has over 200
million users around the world. The Viber deal is probably the first major purchase of an Israeli tech
start-up by an Asian company.
Also in February 2014, Imperva, a California-based information security company, announced its
acquisition of Israeli cloud-based security firms Skyfence and Incapsula. The purchase price for
Skyfence was $60 million, while the price tag on Incapsula was not disclosed. The companies are
expected to continue to operate independently in Israel. The acquisitions signal the continued
growth of the Israeli cyber-security industry, which has seen nearly $400 million invested in 78
companies over the past four years.
In the same month, Google announced its purchase of Israeli security start-up SlickLogin.
SlickLogin, an early-stage start-up, develops smart identification technology through user
smartphones, utilising sound to simplify login processes. The terms of the purchase were not
announced.
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In May 2014, Chinese government-owned Bright Food signed an agreement to acquire a 56%
controlling stake in Israel’s largest food manufacturer, Tnuva, from Apax Partners, based on a
company valuation of NIS 8.6 billion. The deal is due to generate a NIS 4 billion profit on its
investment for Apax Partners. The deal is still subject to regulatory approvals and is currently the
subject of a heated public debate focused on the fact that Apax Partners is exempt from tax in Israel
and on the implications of transferring control over the country’s largest food supplier to an investor
controlled by a foreign government.
In the same month, the Azrieli Group announced the sale of its paint-producing subsidiary, Tambour
to the Singaporean based Kusto group for consideration of 500 million shekels (approximately $144
million). This announcement surprised the market as the buyer is not a known player in Israel and it
was widely speculated that Tambour would be bought by Apax Partners’ new Israeli-focused midmarket fund.
May also saw Axel Springer Digital Classifieds (ASDC), a joint venture of Axel Springer and General
Atlantic, acquire 100 percent of Coral-Tell Ltd., which operates the leading classifieds portal ‘yad2’
(yad2.co.il) in Israel. The purchase price amounts to approximately EUR 165 million. The
completion of the transaction is subject to approval by the competent authorities.
As of May 2014, the Caesarea-based mobile device chip maker Wilocity is in advanced talks over
its acquisition by Qualcomm, the California-based multinational mobile phone chip manufacturer.
The proposed price is estimated to be some $300 million, but the two sides have yet to agree terms
on all the provisions of the sale. Qualcomm has already invested in Wilocity and the two firms have
also cooperated on product development of chips for Qualcomm, including Wilocity’s high-speed
wireless chip. All told, Wilocity has attracted $105 million from investors, including not only
Qualcomm but also semiconductor giant Marvell Technology.
In addition, Intuit Inc., a U.S based software company, entered an agreement in May 2014, to buy
Check, an Israeli based company which specialises in online mobile payments, for $360 million,
adding payment capabilities to its online and mobile personal financial management (PFM)
offerings. The companies have reported an anticipated transaction completion in Q4 of fiscal year
2014.
Epstein Rosenblum Maoz (ERM)’s corporate department has extensive experience advising on
complex cross-border M&A, private equity, capital markets and venture capital transactions, as well
as on various corporate matters and it has been involved in many of the recent high-profile M&A
transactions carried out in Israeli in recent years. Our corporate practice is regularly recommended
by the leading international legal directories, including Legal500, Chambers and Partners and
IFLR1000.
For more information, please contact Nimrod Rosenblum, Simon Marks or Jeremy Seeff.
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ERM bulletin // June 2014
Nimrod Rosenblum
Partner, Head of Corporate
Epstein Rosenblum Maoz (ERM)
E: [email protected]
T: +972 (3) 606 1603
Simon Marks
Partner, Head of Technology
Epstein Rosenblum Maoz (ERM)
E: [email protected]
T: +972 (3) 606 1605
Jeremy Seeff
Foreign Associate, Corporate
Epstein Rosenblum Maoz (ERM)
E: [email protected]
T: +972 (3) 606 1632
This publication is intended as a general guide only and should not be regarded as legal advice or be relied
upon. You should seek specific professional advice in applying the applicable law to any specific situation.
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