Trendlines associate company in talks to be sold for US$16m
Catalist-listed Trendlines Group said on Friday that its
26.46 per cent-owned associated company ETView Medical could soon be acquired
for US$16 million - in what would be the medical tech (medtech) incubator's
first exit of a portfolio company since it listed on the Singapore Exchange in
November 2015.
Comments
Jacquelyn Cheok
18 June 2016
Catalist-listed Trendlines Group said on Friday that its 26.46 per cent-owned associated company ETView Medical could soon be acquired for US$16 million - in what would be the medical tech (medtech) incubator's first exit of a portfolio company since it listed on the Singapore Exchange in November 2015.
Trendlines said that ETView, which manufactures airway visualisation products for medical professionals, has reported to the Tel Aviv Stock Exchange (TASE) that it is in an advanced stage of negotiations with an international company, with the intention to sign a definitive agreement "as soon as possible" to sell ETView to the international company.
Asked how soon, and for the name of the potential buyer, a Trendlines spokeswoman said that it is unable to disclose the timeline or the buyer's name for now.
The consideration for the proposed sale, which is currently under negotiations, will be US$16 million. This includes the assumption of certain debts and liabilities and expenses of ETView, transaction costs, and employee bonuses, all of which are estimated at about US$3.4 million, according to ETView's report to the TASE, Trendlines said.
Trendlines added that the proposed sale is based on a structure of a "reverse triangular merger", which will result in the delisting of ETView from TASE.
A reverse triangular merger occurs when an acquiring company creates a subsidiary, the subsidiary acquires a target company, and the subsidiary merges with and into the target company. The target company (that is, ETView) survives the merger.
The reverse triangular merger is said to be one of the most common structures in mergers of publicly traded companies. An advantage of a reverse triangular merger is that the acquiring company is able to obtain control of the target company's non-transferable assets and contracts.
The fair value of Trendlines' holdings in ETView was about US$1.3 million as at March 31, 2016, Trendlines said. Should the proposed sale occur, the group is expected to receive net proceeds of about US$3.3 million and a gain from the proposed sale of approximately US$2 million before tax, Trendlines added.
The Israel-based incubator which invests in and nurtures medtech startups from idea to exit, like most incubators, make money when the startups or portfolio companies they take an equity stake in, exit via a trade sale or an initial public offering.
In March, Trendlines announced that it has lost a bid to renew its agricultural tech (agtech) incubator licence in Israel, but that it would bundle its agtech investments with its medtech licence.
DBS Group Research, in a note, maintained its buy rating on the group, urging investors to focus on potential exit opportunities in 2016, most of which will come from Trendlines' medtech companies.
On Friday, Trendlines shares added 2.9 per cent or 0.5 Singapore cent to close at S$0.18.