RRSat Targeting Takeovers for Growth: Israel Overnight
RRSat Global Communications Network Ltd. (RRST), the Israeli distributor of live television programming from Playboy Enterprises Inc. to the National Football League, is seeking to buy companies in the U.S. and Asia to boost growth, Chief Executive Officer Avi Cohen said.
“We are increasing our global footprint with our acquisitions,” Cohen said in an interview at Bloomberg’s headquarters in New York yesterday. “We are looking at another deal in the U.S. as well as one in Asia. In Russia, we will grow our business after opening our office there and we will look into developing a strategy for Latin America after 2014.”
RRSat, which acquires content, adds captions, inserts advertisements, and distributes programs via satellite, cable and Internet in more than 150 countries, posted the lowest revenue growth on record in 2012. The Airport City, Israel-based company made two acquisitions in the past 11 months to enhance its live entertainment offerings and video on-demand services, which include distribution rights to the NFL and the Super Bowl outside the U.S., Cohen said.
Shares of RRSat added 0.5 percent to $7.55 yesterday, extending its advance this year to 13 percent. The Bloomberg Israel-US Equity Index of the most-traded Israeli companies in the U.S. slipped 0.3 percent to 100.55. Alon Blue Square Israel Ltd. rose to a two-month high as SodaStream International Ltd. (SODA) plunged 6 percent. Given Imaging Ltd. (GIVN), the maker of cameras that can be swallowed, increased its premium to its Tel Aviv shares to the highest in a week.
RRSat’s revenue increased 0.4 percent last year, the slowest growth on record, after advancing at an annual average of 13 percent in the three previous years. Sales growth will accelerate 5.4 percent this year to an all-time high of $119.5 million, according to the average estimate of two analysts compiled by Bloomberg.
The global shift from standard definition to high definition (HD) content is a major “market driver for our growth,” Cohen said. “The number of HD channels globally will increase from 3,000 in 2012 to about 16,000 in 2021 and managing this content is more complex and more costly. Content providers will continue to outsource the distribution of HD content to companies like ours.”
RRSat operates in a $9 billion distribution market that includes telecommunications companies, satellite operators, broadcasters, and service providers, according to an Oct. 2013 investor presentation. Service providers make up approximately 30 percent of the distribution market, and RRSat forecasts the segment will represent a larger portion of the total market as the shift to HD intensifies.
Elbit Systems Ltd. (ESLT), the Israeli defense systems developer, rose 1.3 percent to $53.03 in New York yesterday. The Haifa, Israel-based company said Oct. 6 that it won a three-year, $33 million contract to supply surveillance equipment to an Asian-Pacific air force. The Tel Aviv shares added 0.1 percent to 189.90, or $53.41, at 10:02 a.m. local time.
Blue Square, Israel’s second-largest grocery store chain, jumped 4.3 percent to $3.99, leading gains on the Bloomberg Israel-US gauge. Trading volume was 2.4 times the daily average of the past the three months. The Tel Aviv shares this morning widened the premium to New York, advancing 0.1 percent to 14.51 shekels, or $4.08.
Given, based in Yokneam, Israel, added 0.9 percent to $19.32 in New York. The Tel Aviv stock narrowed their discount today, gaining 1.2 percent to 68.20 shekels, or $19.19.
SodaStream, the maker of home soda machines, fell to a one-week low of $62.43, the first drop in five days.
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