Board of Directors of the Israel Technology Company Kaltura As expected, rejected the hostile acquisition offer from competitor Panopto. At the end of the week, the company, which develops solutions in the field of video, reported that after a comprehensive examination that also included consultations with independent financial and legal advisors, the Kaltura board of directors unanimously determined that the offer from Panopto “significantly undervalues Kaltura, and therefore it is not in the interests of the shareholders.”
Kaltora develops and markets video management systems, which are sold to business organizations and media companies. The competitor Panopto provides communication software solutions for universities and business organizations, which helps in recording lectures, screen projections, video streaming and more.
The purchase offer is backed by the controlling owner of Panopto, the private equity fund K1, which owns 6.9% of the shares of Kaltura. At the end of July, Panopto offered to purchase the full shares of Kaltura at a price of 3 dollars per share, which reflects Kaltura’s market value of 383 million dollars. At the time, the price reflected a 27% premium compared to the share price before the report, but it is 70% lower than the price of Kalatura’s share in the July 2021 Nasdaq IPO. Today, the share price is $2.44 and reflects Kalatura’s market value of $320 million.
“The board of directors is open to any opportunity to maximize value”
In the announcement of the rejection of the offer, Kaltura stated that “the company’s board of directors is open to any opportunity to maximize the value for the shareholders, and is committed to acting according to the interests of Kaltura and its shareholders. After a comprehensive examination, we came to the conclusion that the K1 and Panopto proposal greatly undervalues Kaltura, does not recognize the strengths of our business Today and not in the compelling options that lie ahead of us in the future, and therefore it is not in accordance with the interests of our shareholders.”
The members of the board of directors also added that “We strongly believe in our strategy and our ability to generate significant value in the long term for shareholders, as well as in our forecast for a return to profitable growth. We recently took steps to reduce costs and reorganization in order to accelerate this.” Let’s remember that Kaltura recently reported the layoff of 10% of its employees – about 80 employees, of which about 30 are in Israel, and justified the move in the macroeconomic environment.
In the second quarter of this year, Kaltora showed growth of less than 1% compared to the corresponding quarter and the company’s revenues amounted to 42 million dollars. The net loss according to generally accepted accounting rules (GAAP) was $17.3 million, compared to $6.1 million in the corresponding quarter. On a Non-GAAP basis, excluding various accounting items, primarily $6.1 million of capital rewards for employees, a net loss of $10.9 million was recorded, which is 8 cents per share, a reduced loss compared to analysts’ forecasts that expected 10 cents.
A similar takeover attempt in Sargon – without a poison pill
The board of directors of Kaltora is headed by Ron Yekutiel, who is one of the founders of the company and founded it in 2006 together with Dr. Shai David, Dr. Michal Tzur and Eran Itam. Yekutiel, who also serves as CEO, owns 6.9% of Kaltora’s shares at a current value of $21.7 million, compared to a holding worth about $77 million at the time of the offering last year.
Let’s recall that after K1 and Panopto’s report on the purchase of Kalatura shares and an offer to purchase the entire company, Kalatura’s board of directors adopted a poison pill mechanism for a period of one year. This is a mechanism that should help the company avoid a hostile takeover attempt.
The mechanism states that every shareholder of Kaltura who was registered on August 22 received a right to a preferred share; If a certain body reaches a holding of 10% in Kaltura (or 20% for an institutional body that is a passive investor), the shareholders will be able to use this right to purchase a thousand preferred shares at an exercise price of $13.
Kaltora is not the only Israeli technology company whose disappointing business performance and a sharp drop in its stock led to a hostile takeover attempt.
A similar case occurred in the company Sargon which manufactures communication equipment, received a purchase offer from the American competitor Aviat, which also purchased Sargon shares on the stock exchange.
Sargon’s board of directors, led by the chairman and shareholder Zohar Zisafel, strongly opposed the takeover move, and although it did not plant a poison pill against the move, the attempt was actually repelled after Sargon’s shareholders voted against Aviat’s proposals to replace several board members in the company.