Tech Roundup / Israel's R&D Centers Say Lapid Is Good for Business

IntuCell is making a nearly half-billion-dollar exit via Cisco, TowerJazz is negotiating the purchase of Mircon's Kiryat Gat plant and SintecMedia is buying another company.

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R&D centers up and down the land feeling positive after elections: Following the elections, managers of Israeli technology research and development centers are sending encouraging messages to the international corporations they represent. These managers are responsible for maintaining connections with global technology powerhouses, keeping them informed of any changes in the local markets. In reporting the election results, they noted that the entry of Yair Lapid onto the scene is a positive development, signaling the probable creation of a broad-based government. This will lead to stability, which will enable the government to deal with the budget deficit. “There was some concern earlier on regarding the possible participation of Shelly Yacimovich in the government, given her stand on economic issues,” says a senior representative of an international corporation in Israel. “As far as we’re concerned, the entry of Yesh Atid into the government is very important, since it brings in people like Meir Cohen, the mayor of Dimona, who will act to develop the south, says Orna Berry, Chair of the EMC Center of Excellence in Israel. “We have a development center in Beersheba, and it is vital that investment funds be directed there in order to foster a fertile atmosphere of growth."

“My managers are very interested in what’s happening in Israel. We have a board meeting next week, and the political developments here will be one of the topics of discussion,” says Zvi Feuer, the chief executive of Siemens Industry Software Israel. “I would like to believe that a broad-based government is in the making, which will produce stability, at least in the short term. This will translate into financial stability as well. It is common knowledge that Israel faces a budget deficit. The question is how this will be dealt with, whether by tax increases or by reductions in investments in the territories or in ultra-Orthodox communities."

Cisco purchasing IntuCell for $475 million:In one of the largest exits in the Israeli high-tech sector in recent years, communications equipment giant Cisco announced the purchase of the Israeli start-up IntuCell for $475 million. Cisco has already bought 10 Israeli companies, the last one being the Jerusalem-based NDS, purchased last March for NIS 5 billion. The IntuCell deal will be finalized in the third quarter of 2013, subject to customary conditions, including examination by regulators. IntuCell, founded in 2008, develops software for use by wireless network companies, aimed at optimizing and managing networks automatically, by performing dynamic, real-time calibration of transmission. Its current annual turnover is higher than $100 million. The company’s one hundred employees in Ra’anana will be taken on by Cisco and will move to Netanya once the deal is finalized.

The biggest winner in the deal is global venture fund Bessemer Partners, which holds 47 percent of IntuCell’s shares, after investing just $6 million two years ago when the company had six employees. “This is a great exit. We are proud of this company and are very happy. With the right people you can design an amazing company and a great exit. This was an investment in an area that many people had given up on. This might serve as a wake-up call for the high-tech industry, suggesting that people not follow the herd into one area, but come up with a product or technology that shakes-up the business or technology world in a big way. IntuCell did this in the Base Stations field with novel software, while everyone else was developing hardware, with only small profit margins. They did this in a very smart way, and Cisco jumped at the opportunity, sensing that this was a great opportunity to enter a new strategic field while making large profits,” says Adam Fisher, a Bessemer partner who handles its investments in Israel.

TowerJazz in negotiations to purchase Micron plant:The Migdal Ha’emek-based company TowerJazz is negotiating the purchase of the American company Micron Technology's microchip production plant in Kiryat Gat. Last month, Micron informed its 1,300 employees that it intended to close or sell the plant by 2015. Intel set up the facility in 1999 to produce its new Pentium processors. Ownership was later transferred to Numonyx, a company owned jointly by Intel, STMicroelectronics and the Francisco Partners Fund. This was part of Intel's global strategy to increase its efficiency in the production of flash memory components. In 2010, Micron took over Numonyx in a deal that included the plant in Kiryat Gat. As the new arrangement is shaping up, Towerjazz will buy the plant while ensuring continuing orders amid a switch to analog technologies. This is similar to deal made in June 2011, where Towerjazz purchased a plant in Japan from Micron for $140 million. As part of the deal, Micron obtained 6 percent of TowerJazz's shares. Towerjazz, valued at NIS 690 million, is traded on Nasdaq and the Tel Aviv Stock Exchange. It produces and markets analog chips for the electronics industry. In the third quarter of 2012, it reported sales of $154.6 million, a 12 percent drop compared to the same quarter in the preceding year.

SintecMedia making second purchase in two weeks:The Israeli company, which designs and markets management systems for broadcasting and advertising by television, cable and new media networks, just announced it is purchasing the American company Argo Systems. Argo designs business software for broadcasting networks. In early January, the company announced it was buying another American company, StoreTV. The purchase, for an undisclosed amount, was made through an American subsidiary.  SintecMedia, which employs 300 people, mainly in Jerusalem, was established in 2000, and is supported by Riverwood Capital. It has support centers in New York, London and Denver. It is headed by its founder, Amotz Yarden. Among its clients are NBC Universal, ABC, the Canadian CBC and Televisa Mexico. In announcing the purchase of StoreTV, the company disclosed that it was forecasting NIS 200 million in revenues for 2013. Riverwood Capital is the main shareholder, having bought the holdings of various investors for $103 million.

The purple bell pepper, Israeli R&D at its finest.Credit: Central-and Northern-Arava R&D

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