FIMI Opportunity Funds, a private equity fund led by founder and CEO Ishay Davidi, has signed a binding agreement to acquire control of PCB Technologies Ltd. (TASE:PCBT) from Priortech Ltd. (TASE:PRTC), which holds 70% of PCB's shares.
Upon completion of the deal, slated in a few weeks' time, FIMI will inject NIS 125 million into PCB in exchange for an allocation of 51% of that company's share capital at a value of NIS 243 million after money, reflecting a share price of NIS 3.60.
It was also agreed that when the deal is completed, PCB will be able to distribute a NIS 12 million dividend, in which case the share price for the deal will be adjusted.
The deal includes addition arrangements customary in deals of this type, including on a majority on the board of directors for FIMI and Priortech's right to sell its shares in PCB if FIMI does so.
When FIMI, Priortech, and BCP announced the investment last November, PCB's share price was NIS 3.33, and the share price leaped 50% to NIS 5 in response to the announcement. The share price closed at NIS 4.73 yesterday, reflected a NIS 156 million market cap, 31% higher than the company price in the deal.
PCB manufactures printed circuits and assembles components and systems. The company's printed circuits are complex in their flexibility, density, number of layers, and resistance to heat. PCB's main specialty is the production of small and medium-sized series on short notice. In assembly, the company carries out projects in a variety of spheres and markets. Most of its sales are to customers in the defense and medical markets.
PCB's revenue grew 4.7% to NIS 241 million in the first nine months of 2017. The strengthening of the shekel against the dollar, however, resulted in a NIS 3.3 million operating loss, compared with a NIS 200,000 operating profit in the corresponding period on 2016. PCB posted a NIS 4.6 million net loss in January-September 2017, compared with a NIS 65,000 net loss in the corresponding period in the preceding year. As of the end of September 2017, PCB has NIS 16 million in cash, and its equity was NIS 206 million.
FIMI invested in Priortech, PCB's parent company, eight years ago. Priortech, led by chairperson and CEO Yotam Stern, is a technology holding company whose main holding is in Camtek Ltd. (Nasdaq: CAMT; TASE:CAMT), a company with a NIS 216 million market cap. Priortech owns 45.4% of Camtek, which manufactures testing systems for printed circuits, and completely owns Amitech, which has developed manufacturing technology for electronic components platforms.
FIMI's investment in Priortech in 2010 was in the form of a $15 million loan with a $15 million option for investing in the company at NIS 25 per share. Piortech's share price at the time was NIS 20. The share price plunged to less than NIS 10 in mid-2016, but has since recovered, and is currently at NIS 29, reflecting a NIS 322 million market cap.
Together with the PCB deal, FIMI's option for investing in Priortech's shares has been extended to the end of 2019 (at a strike price of NIS 25), and the repayment date for the balance of the loan, less than $2 million, has also been extended (if the option is not exercised, the balance of the loan will be just over $3 million) for two years.
Davidi today said, "PCB operates in sectors with substantial growth and profit potential. It is the only company in Israel with general capability to produce printed circuits and assemble systems under a single roof. Its products are designed for the defense and medical markets, and are mostly aimed at overseas market. We believe that the company's fields of business, combined with FIMI's know-how and the many years of experience of the company's managers, will result in PCB's consolidation and development in its market. FIMI plans to find additional growth engines for the company, and to make substantial capital investments that will boost the company's profitability."
Published by Globes [online], Israel Business News - www.globes-online.com - on March 1, 2018
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