Analysts doubt Retalix deal imminent [p. 16]

Shares of Retalix Ltd. jumped Thursday amid speculation it might be the next takeover in the hot Israeli technology market, but analysts were quick to quash the notion that any deal was imminent. "The timing isn't right," Oscar Gruss analyst Roni Biron told The Jerusalem Post, noting that Retalix shares are trading at very low prices, which reflect issues that the company says are temporary. "If they're able to overcome their problems in the next few quarters, the stock's likely to trade higher and they'll get a much more appealing offer in the future." Retalix shares spiked NIS 4.67, or 6.2 percent, to NIS 74.97 Thursday after the Hebrew press reported that the maker of software used by supermarket chains was in talks to be acquired by VeriFone Holdings Co., a US provider of electronic payment equipment, which just completed the purchase of Lipman Electronic Engineering Ltd., another Israeli company. "The company's policy is not to comment on market rumor and speculation," said Motti Gadish, director of corporate communications at Retalix. According to the press report, VeriFone's proposal valued the company at some $350 million to $400m., a number that Gruss's Biron said does not maximize Retalix's shareholder equity and he believes a deal is unlikely at that price. "I don't think it's a sensible scenario for Retalix," he told the Post, noting that the company's current valuation reflects problematic execution. Retalix shares are down some 40% year-to-date. Just last week the company lowered its outlook for the year, citing delays in the signing of contracts. That's not to say Biron doesn't see the Ra'anana-based company as an attractive acquisition candidate. "The retail software sector is consolidating and SAP and Oracle are in a buying mode right now. They are focusing on non-food verticals but at some stage they will start to look into food and fuel and when that happens it could trigger a bidding war for Retalix," he said. Clal Finance Batucha analyst Tsahi Avraham echoed Biron's sentiments about the company's depressed valuation and added a few names to the list of potential buyers for Retalix including IBM and NCR. "I think we are looking at a higher level bid... I think they can get more than the $350m. that was mentioned in the article. I think they can reach even $500m.," Avraham said. Avi Krawitz contributed to this report.