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The US-Israel Legal Review 2019 47
in comparison to 2017, the name of the game
was higher valuations which led to the overall
investments in high-tech companies in Israel
soaring to $6.47 billion in 2018 (compared to
$5.5 billion in 2017), and the total high-tech exits
rising significantly, with $12.63 billion being spent
across only 103 deals. Acquisitions such as that of
Orbotech by KLA Tencor for $3.4 billion, of Mazor
Robotics by Medtronic for $1.6 billion, and the
acquisition of SynaMedia (Cisco) by Permira at an
estimated value of US$ 1 billion demonstrate the
vast potential for sky-high returns in the scene
involving Israeli mature high-tech companies.
LOW-TECH, HIGH REWARD
Whilst the undiminished attractiveness of the
Israeli high-tech sector will come as no surprise
to those with even a passing familiarity of the
industry, and there is no doubt that Israel continues
to be a global powerhouse in the high-tech world,
there is exceptional diversity of opportunity
available for savvy investors, and so it was the
low-tech sector which made a strong statement
of intent going into 2019. Over the course of 2018,
the low-tech sector outperformed its noisier rival
and claimed the largest purchase of an Israeli
company in 2018 with the International Flavors &
Fragrances’ acquisition of Frutarom for $7.1 billion.
Furthermore, PepsiCo’s acquisition of SodaStream,
a company that manufactures “sparkling water
makers”, came in second at $3.2 billion.
In terms of volume, the “industrial” sector
eclipsed all its competition, with 27 transactions
involving Israeli companies totaling around $12
billion. The growing trend of Israeli industrials
exporting globally proved to be a big hit, and
promises to pose an intriguing challenge to the
high-tech giants who have traditionally dominated
the headlines.
INDUSTRIES TO WATCH IN 2019
Massive returns were clearly available to high and
low-tech companies alike; but which industries
are likely to break the mould in 2019? Whilst
cryptocurrencies’ horizon is unclear, industries such
as cyber-security, auto-tech, andmedicinal cannabis
are increasingly ripe for significant returns.
For example, the unique intersection between
government, academia, defense, and start-up
ventures has facilitated a five-fold increase in
VC investments in cyber-security since 2014.
Furthermore, 20% of global VC investments in
cybersecurity in 2018, totaling $1.19 billion (a
record breaking amount for the fourth year in a
row), went to Israeli companies. With this, Israel
became one of the most alluring spot for VC
investment in cybersecurity companies outside
of the United States, and Israeli early-stage
cybersecurity start-ups received larger Seed and
Series A rounds than even their competitors in the
United States. With an infrastructure designed
to advance premier cyber products, along with a
business-friendly environment, the tremendous
momentum building behind Israeli cyber-security
SHAY DAYAN
PARTNER
NITZAN ABERBACH
PARTNER
There is exceptional diversity of
opportunity available for savvy
investors, and so it was the low-
tech sector whichmade a strong
statement of intent going into
2019.