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Israel M&A Expected to Surge Driven by TMT Deals

  • The future of M&A in Israel looks bright driven by TMT dealmaking
  • Private equity buyouts reached record figures in 2017
  • Stakeholders expect an increase in inbound private equity deals

Tel Aviv, Israel, 30 May 2018: According to a recent White & Case survey of senior-level executives at Israel-based companies and private equity firms, the future of M&A in Israel looks bright, despite shifting market dynamics. Stakeholders expect growth to accelerate with 79% of respondents saying that their companies will be involved in more M&A in the next 12 months compared to the previous 12 months. In terms of challenges, regional instability is the top concern, closely followed by regulatory/legal issues. The findings were announced at Mergermarket’s Israel M&A and Private Equity Forum held at the Sheraton in Tel Aviv on 30th May 2018.

On the other hand, international private equity funds have become more comfortable of late and are looking to invest in companies in both high-tech and traditional sectors. Last year saw the highest number of buyouts targeting Israel on Mergermarket record with 29 deals announced, almost double the 16 seen in 2016. This included CVC Capital Partners’ $703m acquisition of Teva’s women’s health unit. This year has started off on a slower footing with just one buyout targeting Israel in Q1. According to White & Case’s survey, stakeholders expect foreign public companies and PE firms to be more active than domestic private companies and PE firms in the coming year. Activism in Israel also seems likely to increase.

“Israeli companies have been increasingly subject to shareholder activism and hostile bids over recent years, both from international activists and Israeli investors. And because Israeli law does not allow for "poison pill" strategies that would discourage hostile takeovers, Israeli companies may be particularly vulnerable to activist strategies" commented Colin Diamond, Israel Practice co-head at White & Case.

TMT is likely to continue to be the most active sector in Israel, according to Mergermarket intelligence with companies in the autonomous driving space attracting buy-side attention. The sector is receiving international interest as traditional automotive firms look to stay ahead of the curve and rivals alike. Last year also saw the $450m acquisition of automotive cyber security firm Argus Cyber Security by Continental. The transaction will allow Argus to further accelerate the vision to protect all vehicles on the road from cyber threats. 

“Israel has established itself as a world-class tech hub, and investors are seeking opportunities to access innovation through mergers and acquisitions. Demand for tech assets are driving Israel's M&A market, with cyber security and automotive tech firms gathering pace” commented Doron Gurevitz – Managing Director and Head of Israel at Rothschild Global Advisory.

“The cyber and the automotive tech industries were among the driving forces of Israeli M&A transactions last year. We expect to see this trend continue through 2018, as well” commented Ran Hai, Corporate and M&A Partner at Herzog, Fox & Neeman. “The rush for corporates to acquire and take advantage of the latest technological advancements is leading to Israeli M&A becoming increasingly active” commented Jonathan Klonowski, EMEA Research Editor at Mergermarket. 

Media enquiries:
Ilana Cherneko, Media Consultant
Debby Group
T: +972 3 5683000
E: ilana@debby.co.il

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