Ormat and Amdocs: Our Top 2 M&A Candidates for 2008

With news of the Israeli company NetManage (NETM) being acquired by Rocket Software for approximately $69 million, which is a 95% premium over Tuesday’s closing price, coming on the heals of HP’s (HPQ) purchase of Nur Microprinters [NURMF.PK] earlier in the week, Israeli M & A is back with a vengeance. In what was a very slow year up until now, has suddenly turned hotter than the New England Patriots.

With the focus squarely back on foreign firms picking up publicly traded Israeli firms for cheap, here at IOI, we would like to present our top 2 M&A picks for 2008:

Ormat Technologies (ORA) engages in the geothermal and recovered energy power business. It has produced impressive growth with a 13% rise in net income last quarter. With rumors swirling that both Apax Private Equity and Goldman Sachs (GS), are looking at buying a 10% share of the company, and local business Chaim Katzman (no relation) continually raising his stake in the company, Ormat is a prime takeover target.

Amdocs (DOX), the telecom billings systems firm has been a poor performer for investors over the last 6 months, but with a sparkling balance sheet and dominance in the billing field it could be a perfect fir for the likes of an IBM (IBM) or SAP (SAP), as they look to add another product to their offering. While I have mentioned these rumors before, with the stock 15% down, and 2008 shaping up to be a great year for Amdocs, the time seems perfect for an offer.

Disclosure: Author’s fund owns stock in, and is long ORA and DOX. He holds no position in any other stock mentioned, as of December 12, 2007.

Comments

[Chrrrrris:]

SAP would never buy amdocs - the company is a "build not buy" shop, and an amdocs acquisition hurts margins

2008 Sep 24 09:03 PM