Replies to post #277 on Elbit Vision Systems Ltd. (fka EVSNF)

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Off Topic EVS, On Topic owner, M.Shamir

Lipman soars on “Globes” report
Merrill Lynch: A takeover by VeriFone is logical.
Tali Tsipori 23 Mar 06 19:15
Lipman Electronics Engineering (Nasdaq: LPMA; TASE: LPMA) rose 7.9% on ten times its usual trading volume on Nasdaq yesterday in response to a “Globes” exclusive about negotiations for the sale of the company. “Globes” reported yesterday that VeriFone Holdings Inc. (NYSE:PAY) was negotiating to acquire Lipman at a company value of $800-900 million, a 20-30% premium on Lipman’s market cap before yesterday’s rise in its share.
Lipman develops credit card scanning and verification systems, and VeriFone is considered one of its largest competitors. VeriFone has a market cap of $2 billion. Its share closed almost unchanged yesterday.

The response by Lipman’s controlling shareholders, First Israel Mezzanine Investors Fund (FIMI) and Mivtach Shamir Holdings Ltd. (TASE:MISH) was not long delayed when the Tel Aviv Stock Exchange (TASE) opened today. More accurate to say, there was no reaction. “The TASE asked the companies about the newspaper reports concerning an acquisition of Lipman, and Mivtach Shamir’s 13% stake in the company. The companies said they did not respond to capital market rumors,” stated the TASE in a press release of its own. Lipman rose 5.8% on the TASE today on a positive arbitrage gap, and its market cap is now $746 million. Yesterday’s share price was a six-month peak.

Merrill Lynch analysts Gregory Smith and David Parker quickly published a revised recommendation for Lipman today. They wrote, “Israeli newspaper “Globes” reports today that VeriFone is in discussions to acquire Lipman for $800-900 million, which would equate to $29 to $33 per share. We think a merger between these two companies would make both strategic and financial sense as it would likely be very accretive to VeriFone while potentially providing an attractive price to Lipman shareholders. However, even without an acquisition, we think Lipman shares can trade higher based on improving fundamentals, a very healthy balance sheet, and a strong market environment.”

On the other hand, Poalim Sahar analyst Yoav Burgan is much less optimistic about Lipman’s share. “Negotiations for the acquisition of the company are definitely an interesting development. The identity of the buyer seems logical to me, because most of VeriFone’s business - 55-60% - is in the US. The acquisition of Lipman will open international markets for the company, such as Turkey, Brazil, Spain and the UK, where Lipman dominates.”

Burgan warns, however, “Nevertheless, the reported acquisition price seems too high to me. It can be justified only by the synergetic value that VeriFone itself attributes to the acquisition.” He estimates Lipman’s net real value as the company’s market cap. “Any premium on the market cap is understandable only because of VeriFone’s specific needs.”

What about Lipman’s controlling shareholders, FIMI and Mivtach Shamir? Burgan says, “There is a feeling that the shareholders have fulfilled their interest in the company. Lipman created phenomenal yields for its shareholders in recent years, and some people say that Lipman is yesterday’s newsfor FIMI and Mivtach Shamir.”

Published by Globes [online], Israel business news - www.globes.co.il - on March 23, 2006

http://www.globes.co.il/serveen/globes/DocView.asp?did=1000074873&fid=980

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