Interview on purchase of Loronix:
globes.co.il
Comverse Acquiring Loronix of US
for $224 Mln by Share Swap
By Eliav Alalof
Israeli company Comverse is acquiring Loronix
of the US in a share swap deal at $224 million
value. This involves a premium of 42% in excess
of Loronix's value on Wall Street.
Comverse is trading on Wall Street at a value of
$17 billion. The company is a leader in the
supply of software systems enabling enhanced
services for wireless and wireline network
operators, and a leader in digital recording
systems for call centres, as well as added value
services.
The Comverse Infosys division, into which the
activity of the acquired company will be
integrated, engages in the development of data
communications, voice, fax and other digital
recording equipment for the defence market and
intelligence bodies, as also for civilian
applications in telephone support centres, which
is the fastest growing activity in this division.
Loronix is a leader in the supply of
software-based digital video management
systems based on its core technologies in
areas including video recording, storage,
networking and live Internet video streaming
technology. It almost tripled its sales in 1999 to
$37.5 million, compared to $13 million in 1998.
Its equipment enables the recording, storage
and retrieval of video transmissions, with the
option of transmitting in real time. The company
designates its sales mainly for retail chains,
which position security cameras in retail outlets,
all the cameras being connected to a national
storage centre, and for casinos, in which a
security camera is installed over every table.
"Globes": Comverse Infosys deputy finance
manager Igal Nissim, you are paying $224
million for a company that is trading at $157
million. Why?
Igal Nissim "When you want to buy a company,
you have to pay a premium, otherwise the deal
does not take place. Besides, this is an
excellent company, that has posted a
impressive growth rate and superb financial
performance".
The connection between Loronix and
Comverse is not entirely clear. Can you
explain the logic behind the deal?
"Loronix will continue to be run as an
independent company until we consider how to
integrate it into Comverse's activities".
Aren't you supposed to do that before
buying the company?
"Our general idea is to utilise their video
technology throughout the company. The
primary affinity is with Infosys's civilian field.".
The link still isn't clear.
"Loronix is a leading company with an
interesting technology. The video field in which it
operates is growing, and the voice field in which
Infosys operates is also growing. This means
that Infosys's product basket will simply be
larger".
There is a feeling that you are closing the
deal in order to take advantage of the
stratospheric heights the Comverse share
has reached.
"I think that is true of any market. After all, the
whole market is inflated, and all shares are
characterised by very high value levels.
Moreover, all mergers take the form of share
swaps, and the value of the deals is therefore
theoretical. After all, no money is exiting the
company, . Shares are the existing currency for
acquisitions, and we play the game like
everyone else".
Isn't that telling the market that you think
Comverse isn't really worth $17 billion?
"Comverse has real technology, real customers
and real sales, and we have a value of billions
based on that. We are not like all those dream
companies with a value of billions of dollars and
an unrealised idea".
Published by Israel's Business Arena on 6
March, 2000> |
