Three subsidiaries in Nochi Dankner’s financially-troubled IDB group have agreed to sell their stakes in high-tech firm Given Imaging to an unnamed investor at a market value of $955 million.
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Some analysts say the acquiring firm is Covidien Plc, an Ireland-based medical-device maker that is traded on the New York Stock Exchange at a market cap of $31 billion.
Given Imaging is best known for its PillCam, an ingestible camera to help diagnose digestive ailments. The deal sees the Yokne’am-based company’s stock sold at a 26% premium to its price on the Nasdaq and 75% to its average price over the past 12 months. The company’s shares are also traded on the Tel Aviv Stock Exchange.
IDB subsidiaries Discount Investment Corp., Elron Electronic Industries and Rafael Development Corp. hold stakes in Given Imaging. The deal will be brought before the boards of the three companies on Sunday, and is subject to approval by Given Imaging shareholders.
The sale would inject much-needed cash into the IDB group - $142 million for Discount Investment, $204 million for Elron and $80 million for Rafael Development Corp.
The deal would be an achievement for Dankner, who associates say rejected a bid in February for Given Imaging at $15 per share, half the price for which the company would be sold in the current deal.
In other IDB developments, Dankner is pulling out all the stops in his bid to retain control of the group as creditors vote on two proposals, one involving Dankner and Ukrainian businessman Alexander Granovsky, another involving Argentine businessman Eduardo Elsztain
On Friday, IDB Holding, the company at the top of the IDB pyramid, filed a court request to defer the deadline for the vote from Sunday to Monday, in part to let creditors change their vote. IDB Holding says this is required due to what it claims is misleading information that could have swayed the vote.
The higher price for Given Imaging might be explained by developments including Japanese approval for its video-camera pill to diagnose precancerous polyps. Also, the Japanese Health Ministry has agreed to subsidize tests performed by the company’s PillCam Colon video pill to the tune of $840 per test. This process will begin in January.
Given Imaging also expects to win approval from the U.S. Federal Drug Administration next year to sell PillCam Colon in the United States.
On the sale of Given Imaging, Discount Investment is expected to record a capital gain of $158 million, or 554 million shekels, including its share in Elron’s profit on the sale. IDB Development, Discount Investment’s parent company, would record a capital gain of 357 million shekels, and IDB Holding would record a capital gain of 347 million shekels.
Given Imaging has not yet reported to the U.S. Security and Exchange Commission on the deal, apparently because the transaction has not yet been approved by Given Imaging’s board of directors and shareholders.
Like many companies, Covidien is based in Dublin to take advantage of Irish tax benefits. It specializes in minimally-invasive surgical instruments. A Given Imaging purchase would be its fourth acquisition of an Israeli company in the past two years.
In March last year, Covidien bought SuperDimension, which develops respiratory diagnostic medical instruments, for $350 million. A month later it bought Oridion, which makes equipment that measures carbon dioxide levels in a patient’s breath, for $346 million.
A more modest acquisition was the summer-of-2012 purchase of PolyTouch Medical, for what was thought to be about $20 million. PolyTouch sells laporascopic surgical instruments that enable surgeons to insert soft-tissue prosthetics for a variety of procedures including abdominal-hernia repair.
Michael Rochvarger and Shelly Appelberg contributed reporting.