Israeli companies and startups were sold for a total of $23 billion in 112 deals in a number of exit transactions including IPOs, mergers and buyout deals in 2017, reflecting a 19 percent increase from last year, according to a new report by Israel-based IVC Research Center and law firm Meitar Liquornik Geva Leshem Tal.
The sale of the Jerusalem-based Mobileye to Intel for a mammoth sum of $15.3 billion and the acquisition of Israeli drug maker Neuroderm by Mitsubishi Tanabe Pharma for over $1 billion in 2017 accounts for a majority of the total $23 billion. Excluding those two, the total value of the transactions still reached $6.6 billion, according to the report, compared with 2016’s $10.02 billion value.
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The highest number of deals in 2017 were for Israeli companies in the IT and software field (30), followed by internet (24), communications (18), life sciences (16), and semiconductors and cleantech with 3 each, and 9 deals for companies in the “miscellaneous tech” field such as hardware, defense and industrial applications.
The IVC and Meitar’s report details 112 deals in 2017, including 92 M&A (mergers and acquisitions) deals, 13 IPOs, and 7 buyouts noting a decline in the number for the fourth consecutive year and down by 7 percent from 2016’s 120 deals. But while the number of deals were down, the deal value was up, with 18 exits over $100 million in 2017, up from 11 in 2017.
Meitar Liquornik Geva Leshem partner Dan Shamgar said on Wednesday that while there’s been a 25 percent drop in the number of deals over the past four years, the market is showing stability and maturity as there is more money pouring into companies in a given funding round (over $30 million), indicating growing expectations from investors, and the amount of the average deal is also up. The VC-backed exit average amount totaled $62.6 million, while non-VC-backed exits averaged $39 million, according to the report. A significant drop too was noted, compared to 2016, of investments in early-stage startups.
Foreign and Israeli buyers
American and Canadian companies made up a majority of purchasers of Israeli companies in 2017 in M&A deals, some 42 percent, while 28 percent were Israeli buyers, 13 percent were European and three were Chinese. The remaining 11 percent were listed as “other” in the IVC/Meitar report. With IPOs, Israeli companies appeared to struggle, according to the report, attracting $44 million in 13 deals, with just one company — Forescout — meeting the Nasdaq threshold.
Notable exits in 2017 include the acquisition of Argus Cyber Security in November 2017 by auto giant Continental AG for $430 million, the sale of Israeli game developer Plarium to Australia’s Aristocrat for $500 million and the purchase of Tel Aviv-based customer identity management firm Gigya by German software giant SAP for $350 million.
Meanwhile, Israeli companies undertook 30 deals to acquire other Israeli companies, amounting to a mere $393 million. The analysis also notes a decrease in the total value of transactions for Israeli buyers in M&A deals, with a “modest” $1.17 billion in 2017, down significantly from 2016’s $3.46 billion in the same category.
Earlier this week, the IVC and law firm Zag released a report showing that in 2017 Israeli startups raised an all time high of over $5 billion. The numbers beat last year’s record of $4.8 billion in 2016, which at the time had been up 11 percent from the $4.3 billion raised in 2015.
IVC-Zag reported that startups raised more than $3.8 billion in the first nine months of 2017 and more than $1.3 billion during the fourth quarter.