Auto safety system manufacturer planning largest Israeli IPO ever in US
Mobileye, the manufacturer of a high-end auto safety system, is planning the
largest US IPO (initial public offering) ever by an Israeli company.
Mobileye is planning an IPO at a colossal company valuation of $2.5-3 billion, according to financial news website Calcalist.
If
that is the case, Mobileye, which specializes in the development of
Advanced Driver Assistance Systems (ADAS) for motor-vehicles, will offer
up the largest ever IPO made by an Israeli company on NASDAQ. According
to the report, the Israeli founders of Mobileye will attempt to raise
$500 million at a company valuation of $2.5-3 billion.
In
July of 2013, the company raised money from five investors that valued
its equity at $1.5 billion. Mobileye’s offering process is managed by
American book running managers Goldman Sachs and Morgan Stanley, who
have a major role in making the company’s IPO one of the largest ever on
NASDAQ.
...
Mobileye is an active safety system in automobiles warning drivers to
prevent collisions and accidents on the road. The company was
established by Professor Amnon Shashua and Ziv Aviram, both of whom are
set to put their 10 percent stock holding in Mobileye on the market as
part of the massive IPO offering.
The driving assistance and
accident prevention system developed by Shashua is the first of its kind
to be introduced to the world of automobiles. Shashua’s unique system
utilizes cameras capable of “artificial vision.” Mobileye’s hold on an
increasingly lucrative field in the automobile industry has helped push
forward its profits steadily, with a number of luxury and family car
manufacturers, like BMW and General Motors, integrating the company’s
technology as a feature in their latest models.
The company plans
to begin developing other automobile-related technologies, such as
automatic driving capabilities. According to reports issued last month,
Mobileye joined in the development of the Tesla Motors’s electrical car
that will be able to drive on its own using five cameras, two in the
front, one in the back and two on the sides, which will be synchronized
with the vehicle’s navigation system.
I'm kind of surprised to see the underwriters allowing the founders to sell what sounds to be their entire stake in an IPO (investors don't usually like to see founders selling), but that's quite an impressive valuation. I'd love to get a piece of the legal work....
Labels: initial public offerings, Israeli high tech
Why IPO's and not M&A?
In an earlier post, I discussed the possibility that Israeli companies would be switching from being targets for mergers and acquisitions (M&A) to
trying to do initial public offerings (IPO's) in 2014. At the time, I speculated that all of the M&A that has been done in the last 8-10 years has been motivated by impatience and by the desire to cash in quickly.
That may well be the case, but there is also a strong incentive for Israeli companies to try to maintain their independence, and that was driven home to me this evening by stories I heard about two local companies that have been bought by foreigners - one recently and one several years ago.
The Israeli corporate culture is very different from the culture in the US. In Israeli companies, employees aren't afraid to speak to their bosses as equals. They don't expect massive layoffs for efficiency or because the company was profitable last year, 'but not profitable enough.' They don't want their businesses driven by analysts' expectations and they don't want to live in constant fear that the company will downsize.
Foreigners who have come here and bought companies have often tended to take the parts they want and shut down (rather than sell - which would at least leave people with jobs) the rest. I know one Israeli company that within a month saw its entire local operation shut down, the entire company moved to the US, and all the Israeli employees (including the founder!) fired. I know another Israeli company where employees have been told that they have to work four times as hard because they will have half the employees and must produce twice the output.
Israelis don't work that way. We are a family-centered society. We like to be home with our kids in the evening. We don't work on holidays. And as long as we're earning decent salaries and our companies are profitable (even if 'not as profitable as expected') we tend to be happy.
The way to keep that culture seems to militate toward staying independent and 'going public' rather than selling out completely and placing our corporations at the mercy of purchasers from abroad who think nothing of laying off women the day after they give birth, forcing employees to take off for Christmas (not a holiday here) or freezing salaries so that a promotion just means that you work harder.
The Israeli mentality tends to be that if you want our technology but you don't want our people, you won't get our technology either.
Expect to see a lot more of that in the coming year.
JMHO (Just my humble opinion).
And PS - I do both public offerings and mergers and acquisitions.
Labels: initial public offerings, Israeli high tech, mergers and acquisitions
