Kibbutz Degania Bet’s Medical Catheter Firm Sold for $200m

Kibbutz stands to receive about $65 million from the sale.

catheters
Bloomberg

Degania Medical, a medical instrument firm based at Kibbutz Degania Bet in the north, is about to be sold in its entirety to the American-British 3i investment fund, at a market value of about $200 million, sources said on Sunday. The current owners of Degania Medical, which specializes in the sale of catheters and other silicone medical products, include the Israeli Viola fund, which has a 40% stake and Kibbutz Degania Bet itself, with a 30% share.

The Viola fund purchased its share of the company five years ago at a market value of about $35 million. The balance of the company is currently owned by the IGI fund and by Degania Medical’s founders and its CEOs over the years.

The sale of the company caused a stir among the members of Kibbutz Degania Bet, a collective community founded in 1920. Its early members included Levy Eshkol, who became Israel’s third prime minister. Representatives of 3i, the purchaser of Degania Medical, have provided the kibbutzniks with an assurance that the company’s production facilities in Israel would remain in operation for the long term and that there would be no layoffs of staff. The kibbutz stands to receive about 250 million shekels ($64.6 million) from the sale.

The terms of the purchase agreement call for most of the purchase price to be paid by the end of this year, with the balance due in mid-2017, contingent on the company’s financial results. The company, which was founded in 1984 as Degania Silicone, has annual sales of $90 million and an operating profit of about 25% of sales. After the Viola fund got into the business, the scope of its business expanded through the purchase of manufacturing facilities in Israel and abroad.

The company, which produces silicone rubber medical devices and operating room accessories in addition to catheters, has a workforce of about 1,400 in seven countries. The company’s value has expanded greatly as a result of its acquisitions. The first was a French cardiology-oriented company, Arthesys SAS, followed by Jerusalem-based Biometrix. Over the past two years Viola has merged the companies and closed the plant in Jerusalem, transferring most of the Jerusalem staff to the north.

Most of the French production was transferred to India in an effort at cost-cutting. Of the company’s staff, about 1,000 are now Indian employees, working at a plant that has received the approval of the U.S. Food and Drug Administration. The company continues to conduct research and development and sales operations from Paris.