Two small, publicly traded Israeli food-tech companies are set to merge. Cell-based milk company Wilk (TASE: WILK) (formerly Biomilk) has announced the signing of a memorandum of understanding to acquire the activities of bee-free honey developer Beeio Honey (TASE: BHNY). Following the announcement, the beleaguered shares of both companies posted substantial increases.
But an examination of the two weeks preceding the announced merger reveals that Wilk’s share price jumped by about 20%, while Beeio Honey’s share price rose by about 90%.
The two, which have not yet recorded any revenue and whose financial reports both contain ‘going concern’ qualifications, are now trading at market caps of about NIS 70 million and NIS 45 million respectively, and even after the recent rises, this is only half the value at which they were traded a year ago.
As part of the expected merger Wilk will acquire 100% of Beeio Honey’s subsidiary Beeio Honey Technologies in a share exchange deal with Beeio Honey Technologies becoming a wholly owned subsidiary of Wilk. Beeio Honey will give up its stock market shell. One of the conditions in the deal is that Wilk will raise at least NIS 3 million before the transaction is completed, which will be allocated to Beeio Honey activities.
The two companies were established in 2018, and they share a group of founders led by Yaron Kaiser, who is a stakeholder and acting chairman of Wilk and a shareholder in Beeio Honey. Wilk develops cell-based milk and yogurt. The products are not yet at the commercial stage. Cash flow is negative, and in 2022 Wilk reported a loss of NIS 17 million. Several months ago Wilk raised about NIS 12 million in a financing round led by Danone, one of the world’s leading dairy companies. Central Bottling Co. (Coca-Cola Israel), which owns Tara, also participated in the fundraising.
Beeio Honey, founded by siblings Ofir Dvash and Efrat Dvash-Riesenfeld (who come from a family of beekeepers) sought to develop an artificial version of the bee’s stomach for the production of artificial honey. In March, the company, in which businessman Adi Zim owns about 24% of the shares, announced Ofir Dvash was being replaced as CEO. This was preceded by an announcement in December that half of its employees (about 10 people) were being laid off. In its financial report for 2022, Beeio recorded a NIS 15 million loss, leaving it with NIS 6.5 million in cash. The company’s management said that without additional funding it would not be able to continue activity beyond 12 months from the date of approval of the financial statements.
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Kaiser said, “The two companies have different and complementary technologies. Their offices are next door and the teams know each other. For me, the merger was always a possibility. We know where to raise capital, and we understand the way to reach the market, and we will do everything possible.”
Published by Globes, Israel business news – en.globes.co.il – on July 27, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.
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