IBM Buys Another Israeli Start-Up

Is it me, or does it seem that Israeli startups are hotter than a stolen tamale? Yesterday, International Business Machines Corp. (IBM) announced that it was buying ANOTHER Israeli startup. This time it is FilesX, a company providing data recovery and back-up solutions for business continuity. This is on top of Big Blue’s purchase of XIV, earlier this year.

On the back of IBM’s and AOL's (TWX) activities, it seems to me that the Israel M&A market is heating up - at the start-up level.

Eze Vidra has a very good post over at VC Cafe entitled “The Golden Age? Israeli Startups Experience Funding Streak.“ According to Vidra,

In 2007, Israeli venture capital funds raised a total of $1.1 billion (including venture lending), 21% more than in 2006.

The industry is expecting a slow down on the fund raising side in 2008 and the article shows some good analysis about what may happen to these flush companies and funds in the future.

The same article mentions that M&A activity involving Israeli companies that were either acquired or merged totaled $3.2 billion in 2007 in 75 deals. This is the second-highest number of M&A deals in any one year to date. I find that statistic interesting because, outside of ECI Telecom (ECIL) and Gilat (GILT) getting bought out last week, the M&A activity for the publicly traded Israeli companies that we follow has been somewhat quiet.

For now, Barron’s prediction that Check Point (CHKP) will get bought by IBM is just speculation.