As Israel celebrates 71 years of independence, the nation can look back with pride at its achievements in the technology field.
There are more than 6,600 startups in Israel’s small and connected economy, 14 times the concentration of startups per capita in Europe. And while Israel has just 0.1 percent of the world’s population, the nation attracts 19% of global investment in cybersecurity, ranks number one globally in R&D expenditures per GDP, and attracts the highest rate of venture capital funding per capita in the world — some $674 per capita in 2018, according to a report by Start-Up Nation Central (SNC) and PwC Israel.
According to the report, there are 539 multinational corporations from 35 countries operating in Israel’s tech ecosystem, with these firms seeing the startup-heavy country as a go-to place for new ideas and entrepreneurial culture. They are also snapping up Israeli firms in a bid to stay at the cutting edge of developments.
In addition, according to IVC Research Center, between 1997 and 2019 there have been a total of $152 billion in exits, both initial public offerings of shares and merger and acquisition deals. In that same period, the nation’s 1,121 artificial intelligence companies have raised $9.9 billion; its 430 cybersecurity companies have raised $5.8 billion, and its 309 venture capital funds have raised $25.2 billion.
The Times of Israel takes a look at the largest exits — either sales or IPOs — of some of the nation’s tech firms.
The ranking of the largest exit deals was compiled with the assistance of IVC Research Center, which tracks Israel’s tech industry, and Start-Up Central Finder, a database set up by Start-Up Nation Central.
The biggest exit deals:
The biggest tech deal and the biggest acquisition in Israel to date is that of Mobileye, a Jerusalem-based maker of self-driving technologies. Intel Corp., the US tech giant, acquired the firm for a massive $15.3 billion in March 2017. Founders of the firm are Hebrew University of Jerusalem Prof. Amnon Shashua and Ziv Aviram.
Mellanox Technologies Ltd., an Israeli chip maker founded by Eyal Waldman, signed an accord for a sale to US gaming and computer graphics giant Nvidia Corp. in March 2019 for a whopping $6.9 billion, making it the second-biggest merger and acquisition tech deal in Israel, after Mobileye, and the third biggest deal, after Mobileye and Frutarom (see below).
Mellanox, with headquarters in Yokne’am, Israel, and Sunnyvale, California, is a maker of high-speed servers and storage switching solutions. The products developed by the firm, a pioneer in InfiniBand and Ethernet technologies, are used in supercomputers globally.
SynaMedia Technologies Ltd., a provider of secure and advanced end-to-end open video delivery system, was formerly called NDS Group. The firm, co-founded by Adi Shamir, Dov Rubin and Rupert Murdoch, was acquired by Cisco in 2012, for a massive $5 billion, making it Israel’s third largest tech deal.
Chromatis Networks Inc., a maker of equipment to maximize traffic efficiency on fiber-optic communication networks, was acquired by Lucent Technologies Inc. in 2000 for $4.76 billion. Co-founded by Rafi Gidron and Orni Petrushka, the firm was shut down and all of its 130 workers laid off a little over a year after the acquisition by Lucent, which said that the focus of the Israeli firm did not fit Lucent’s new strategy to serve large telephone companies. In 2006, Lucent merged with Alcatel.
Mercury Interactive Ltd., a maker of business technology optimization (BTO) software and services, was acquired by Hewlett-Packard Enterprises in 2006 for $4.5 billion. It later became part of the US firm’s R&D center in Israel. The firm was founded in 1989 by Amnon Landan and Arye Finegold, and was based in California, with R&D offices in Israel.
MMC Networks Inc. a maker of semiconductors for network processors, was acquired in 2000 by AppliedMicro, a fabless semiconductor company, for $4.5 billion. In 2009 the US firm changed its brand name to AMCC. MMC Networks shares were listed on the Nasdaq in an IPO in October 1997. After the acquisition, the shares were delisted in October 2000. The Israeli firm was founded in 1992 by Amos Wilnai and Oran Uzrad.
Playtika Ltd., an Israeli online gaming company, was acquired twice: the first time in 2011 by US-based Caesars Interactive Entertainment, and then again, in July 2016 by a Chinese consortium, led by Giant Investment (HK) Limited, for $4.4 billion in cash. Founded in 2010 by Robert Antokol, Playtika was a pioneer in the free-to-play games on social networks and mobile platforms and is the creator of popular titles such as Slotomania, House of Fun and Bingo Blitz, which consistently rank among the top-grossing games on Apple’s App Store, Google Play and Facebook.
Lest we forget, other deals that have made a splash:
Frutarom, a maker of flavors and fragrances for use in food, beverages and pharmaceuticals, was acquired in May 2018 by US firm International Flavors & Fragrances (IFF) for $7.1 billion, making it the second-biggest deal ever in Israel, after Mobileye, to date. Because it is not technically a tech company, it was not included in the IVC ranking.
SodaStream, a home seltzer machine company, was acquired by PepsiCo Inc., the US-based drinks, food, and snacks giant, for $3.2 billion in cash in 2018.
Set up in 1903 by Guy Hugh Gilby in the UK, the firm originally sold its aerating water devices to the British upper classes and royal household, gradually expanding its operations globally. It was acquired in 1998 by Israel’s Soda-Club, founded in 1991 by Peter Wiseburgh, who from the late 70s was the sole distributor of SodaStream products in Israel.
The company went from bubbles to making a splash under the leadership of its CEO, Daniel Birnbaum, who rebranded the Israeli maker of fizzy water as a healthier alternative to the drinks offered by its drink-maker competitors, which use massive amounts of sugar and sell their products in planet-killing plastic bottles. SodaStream makes machines that carbonate home tap water in reusable bottles. Like Frutarom, SodaStream is not considered a tech firm and thus is not in the IVC ranking.
Mazor Robotics Ltd.: Even if not among the top 5 biggest tech deals, this Israeli biotech firm that develops robotic surgical systems is worth a shout-out as its sale to Irish-American medical device company Medtronic for $1.64 billion in 2018 marks the biggest exit for an Israeli biotech company to date.
The Israeli firm provides among its products a suite of software that includes image processing and computerized anatomy recognition. The technology helps surgeons better plan spinal procedures. The firm was founded in 2001 by Eli Zahavi and Moshe Shoham.
Staying the course:
Check Point Software Technologies Ltd. the nation’s largest cybersecurity firm, has chosen to shun a sale and instead pursue growth. Founded by Gil Shwed, its current CEO Marius Nacht, and Shlomo Kramer in 1993, the company, whose shares are traded on the Nasdaq, has a market value of $18 billion. The firm had $1.9 billion in revenue in 2018 and net income of $821 million. Its shares have risen almost 17% in the past 12 months.