Gali Weinreb 7 Oct 07 19:30 At the end of last week, Protalix BioTherapeutics Inc (AMEX: PLX) published a prospectus for a first offering on AMEX of about 5% of its share capital. In addition, existing shareholders will make an offer for sale amounting to about 1.7% of the company.
On the basis of the company's current market cap, it will raise some $121 million, while the offer for sale will be worth $37.4 million. However, the offering will probably not be made at the current valuation, which partly derives from the deal in which the company was merged into a stock market shell. The price remained at that level among other things because of the low liquidity of the stock (less than 1% of the stock is marketable). Nevertheless, a year after the merger, it can't be said that the $2.2 billion market cap is solely based on that deal. Someone on the market has been buying shares at that price every day, even if in low volume. It is estimated tha the company will seek a valuation of $800 million to $1 billion in the offering, but there is no telling what the final price will be, or even if the offering will succeed, until the response of the investors is known. The lead underwriters are UBS and CIBC.
If the prices being mentioned on the market are correct, Protalix will raise $55 million, and the offer for sale will bring the shareholders $17 million. Although the offer for sale is small, on the basis of this scenario the shareholders show large gains on paper. The most recent investor in the company, Philip Frost, will make a tenfold return on his investment if the offering is at this price.
Shares of Biocell (TASE: BCEL) (formerly Orazit Ltd.) and Marathon Venture Capital Fund (TASE: MARA), which own 20% and 9% of the company respectively, fully diluted, have risen since the road show began. Biocell, whose only holding is Protalix, is traded at a market cap of NIS 414 millon, which implies a valuation of $1 billion for Protalix.
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