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After Lipman Electronics Engineering and Comverse Technologies announced major deals Monday, investors are wondering what other major Israeli companies may be on the verge of either buying or being bought out.
Last year, merger and acquisition activity in Israel quadrupled to $8 billion, from $2b. the previous year, according to a survey conducted by accounting firm KPMG. Some believe M&A activity will be even higher in 2006.
One Israeli company that seems likely to be sold soon is Fundtech - a Nasdaq-traded electronic payments solution provider from Tel Aviv. Last week, reports in the Hebrew press said the company was in talks with Omaha, Nebraska-based Transaction Systems Architects at a company valuation of about $220 million. If that deal doesn't work out, the company is expected to buy or be bought out by another competitor to sustain its growth.
Two other companies that may become acquisition targets are Mercury Interactive and Given Imaging, said an investment banker at a major financial institution. Mercury, a provider of business optimization solutions that was called "one of the top software firms in the world" by Forbes magazine in 2003, was delisted from the Nasdaq in January after it was rocked by an ugly accounting scandal. "Mercury's business fundamentals are fine, but the accounting problems would justify selling at this point," the source noted.
Given Imaging, which makes a camera-in-a-pill, used for diagnosing certain medical conditions, is also a solid company, but its announcement last week that president and CEO Gavriel Meron was leaving his post raised new question marks, the banker said. "Does this mean a deal is on the way? Not necessarily, but it can sometimes be an indicator," he explained.
On the buy side, the source noted that Check Point Software Technologies is hungry for an acquisition after its planned buy of Sourcefire collapsed. "Check Point indicated in its most recent financial report that another acquisition may be its best way to boost future growth, and it will want to move soon," the banker said.
Another possibility, according to the source, is that geothermal power plant company Ormat Technologies may use some of the $117m. it raised last week in a share offering to buy some of the assets of Calpine, a California-based power plant that recently declared bankruptcy.
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