Business in Brief: $850 Million Acquisition of Israeli Startup in Jeopardy

HeartWare’s Valtech acquisition in jeopardy; Underwriters take more Teva shares; Pelephone eyeing credit card issuer license; Tel Aviv shares start new year on happy note

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HeartWare’s Valtech acquisition in jeopardy

HeartWare’s $850 million acquisition of the Israeli startup Valtech – which was billed as the biggest tech exit of the year for 2015 – is in jeopardy as the U.S. company’s shareholders rebel against the deal.

Activist investors Engaged Capital said on Thursday it wants the company to rescind the offer and is nominating one of its senior analysts as a director to press the issue. Engaged, which owns 1.3% of Heartware, called the decision to buy Valtech, which is developing a device to prevent heart failure, “truly baffling” and “incredibly risky and expensive,” and said it was nominating a director to help “repair the significant damage done to the credibility of the company’s leadership.”

Heartware said in response that Engaged became an investor “only recently” and continues to support the decision. Under the September agreement, HeartWare is supposed to allocate Valtech shareholders 20% of its shares and further cash and share payments if Valtech sales meet milestones. (Yoram Gabison)

Underwriters take more Teva shares

Bloomberg

The underwriters for Teva Pharmaceuticals share offering last month have exercised their over-allotment option to purchase additional shares worth $658 million, Teva said Sunday.

Barclays, Bank of America Merrill Lynch, Citigroup, Morgan Stanley, BNP Paribas, Credit Suisse, HSBC, Mizuho Securities, RBC Capital Markets and SMBC Nikko, which acted as the joint book-running managers for the share offering, bought an additional 5.4 million American depositary shares and 337,500 mandatory preferred shares. That brings the total proceeds of the share offering to $7.24 billion.

Teva, the world’s biggest generic drug maker, will use the funds to finance the cash portion of its planned $40.5 billion purchase of Allergan’s Actavis generics business. It will also likely issue $22 billion of debt in a number of markets to fund the acquisition. Teva shares closed 0.5% higher at 255.80 shekels ($65.80). (Reuters)

Pelephone eyeing credit card issuer license

Bezeq Israeli Telecommunication Corp. headquarters in Tel Aviv, Israel.
Bloomberg

Pelephone, the cellular telephony unit of Bezeq, is seeking a license to become a credit card operator, TheMarker has learned. The company initially plans to use the license, if it gets one, to bill subscribers directly rather than through one of the existing credit card companies and save it considerable fees, but it is also weighing the possibility issuing cards itself and offering clearing services.

Pelephone executives have met with Bank of Israel officials and industry executives to get a better understanding of the technological and regulatory requirements, but no decision has been taken. Pelephone’s move comes as the government explores way of creating more competition in consumer credit, in particular by spinning off the credit card units of Israel’s two biggest banks. Pelephone confirmed it was exploring the issue but declined to elaborate. (Amitai Ziv and Michael Rochvarger)

Tel Aviv shares start new year on happy note

The entrance of the Tel Aviv Stock Exchange.
Bloomberg

Tel Aviv shares kicked off 2016 in an atmosphere of new year’s cheer, with most shares ending strongly higher in heavy trading Sunday. The benchmark TA-25 index rose 0.8% to end the session at 1,540.90 points, while the TA-100 gained 1% to 1,328.33, on unusually heavy 906 million shekels ($233 million) turnover.

Energy and insurance shares paced the gains. Clal Insurance, whose parent company IDB Development got a five-day extension to reach a deal to sell a controlling stake to China’s Microlink, closed 4.2% higher at 49.51 shekels. Among energy stocks, Avner rose 2.2% to 2.46 shekels and Ratio 2.9% to 29 agorot. El Al Airlines, 2015’s top performer, rose 1.6% to 3.15. Bank Leumi, which said it expected to post a 270 million-shekel gain on selling shares in Route 6 and New York real estate, rose 1.5% to 13.70 shekels. (Shelly Appelberg)