Rumors are swirling in the Israeli press that Ormat Technologies (ORA), a leader in geothermal energy, is about to close a large M&A. These rumors are based on an article in Power, Finance and Risk, which is reporting, ” Geothermal developer Ormat Technologies is on the hunt for strategic acquisitions and is working with Lehman Brothers to do so. The company has reportedly looked at a few targets but nothing has yet come to fruition.” The article continues, “Targets on the geothermal side are scant, but one Ormat is said to have chased is Salton Sea, an inland saline lake in Imperial Valley, Calif., with some 500-600 MW of geothermal potential.”

The rumors are that they will offer around $1.1 billion for the Salton Sea project, which will increase Ormat’s output by about 80%.

Funding the acquisition could be another problem. The company, as of 3/31/08,  had about $30.7 million in cash, and in May they sold 3.1 million shares for about $149.6 million. This means that they are going to have to take on a sizable amount of debt to complete an acquisition of this sort.

This move will help placate some large shareholders like Haim Katsman (no relation), who have been pushing for the company to get more aggressive in expanding.

I guess the question is whether taking on such large amounts of debt, is worth the expanded output? I guess only time will tell.

Disclosure: Author’s fund has a position in ORA, he has no position in any other stock mentioned as of 8/04/08.

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NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Rumors are swirling in the Israeli press, that the world’s largest generic drug maker is about to become much larger. Reports are that the Israeli based Teva Pharmaceuticals (TEVA) is in talks to buy US Generic maker Barr Pharmaceuticals (BRL) for as much as $7.5 billion, a 40% premium to their closing price yesterday. While Barr comes with a fat price tag, the deal would make sense for Teva, as Barr is very active in Central and Eastern Europe, geographies that Teva has been targeting at for future growth.

Teva has around $3 billion in the bank so it appears they are going  to have to go out and issue debt to fund the deal. The debt plus the big premium, may pressure the stock price in the short term, but over the long haul, this may prove to be another in a long line of very wise acquisitions.

The deal also brings some pride to the Israeli business community is this would be the biggest M&A in Israeli history. The fact that an Israeli company has the potential to do such a large acquisition is a testament to the ingenuity and steadfastness of the local economy.

Aaron Katsman, IsraelNewsletter.com

Disclosure: Author’s fund has a position in TEVA as of 7/17/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
IsraelNewsletter.com

Shares of technology company Marvell Technology(MRVL), spiked on Friday as rumors swirled about a potential acquisition of the firm at a really sweet premium.

Eric Savitz wrote on the Tech Trader Daily: “Marvell shares are sharply higher this morning on rumors the company might be a takeover target, according to trading sources. The talk is that Texas Instruments (TXN) or private equity firm Silver Point Partners might make an offer; the rumored bid price is $24 a share. That would value the company at $14.4 billion. I repeat: this a rumor, of uncertain validity, so treat it accordingly.”

Not only did the stock price jump but trading in Marvell options also surged. Andrew Wilkinson wrote on SeekingAlpha.com: ” With  80,000 options already in play Marvell ranks early among the most active tickers on our platform, as calls are heavily bought in excess of open interest at the 17.50 strike in the June and July contracts. Premiums are more than 150% higher today at both these strikes.”

We have written about the turnaround taking place at Marvell, and in general we would rather see the turnaround play out, than for the company to accept a buyout offer. But in this case we are taking about a potential premium over 40%. Giddy up! Take the money and run.

Keep in mind that this is only a rumor. Investors should keep an eye on how Marvell options trade over the next few days to try and get an idea if the rumor has any legs. It wouldn’t be the first time that option traders knew something was going on and loaded up the boat for a trade.

Disclosure: Author’s fund has a position in MRVL. He has no position in any other stock mentioned as of 6/15/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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Aaron Katsman
www.IsraelNewsletter.com

Yesterday’s news that the Israeli ‘pill in a camera’ company Given Imaging (GIVN) has settled patent litigation with Olympus (OCPNY.pk), with the Japanese company having to pay Given $2.3 million.

According to the Marketwatch report: “Under the terms, Olympus will pay Given $2.3 million. The companies will cross-license existing patents to each other without royalty payments and agreed to work out royalty payments for future patents. And they’ll cooperate in efforts to develop the market for products.”

I think it’s interesting to note that part of the settlement calls for ‘cooperation’ in developing markets for the products. It’s not often that you see competitors agree in a settlement to work together for a common goal.

The glaring question must be whether we are about to see Given Imaging acquired by Olympus? Only time will tell, but it would make an interesting match. As someone who dabbles in matchmaking in his spare time, I can tell you that both companies posses complementary qualities that would greatly help the other party. Given posses the technological know-how and Olympus has the distribution and marketing network. This sure sounds like a match made in heaven.

For disappointed Given Imaging investors who have continued losing money on their investment, Olympus may just be the white knight that saves the day.

Disclosure: Author’s fund has a position in GIVN, fund has no position in any other stock mentioned as of 4/23/08.

Please see our Disclaimer HERE.

NEW! Introducing Israel Opportunity Investor, our monthly subscription-only newsletter. Stay ahead of the game and make smart decisions in Israel stocks. Go here to learn more.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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