Sarine Technologies Ltd, wishes to update the public on its closing of its acquisition of a minority stake in Kitov.ai. The purpose of this investment is the diversification of Sarine’s focus to additional industries, also considering the current challenges the diamond jewellery industry faces.
Being a company engaged in technologies similar to those employed by Sarine, thus speaking the same language, Kitov.ai provides the Group with the means to diversify into new fields separate from the diamond industry.
Kitov.ai has many industry-leading customers in many varied industries including aerospace, defense, electronics, medical devices, energy control, consumer products and others, in the U.S., Europe, the Far East and Israel. The concluded deal includes an initial cash investment of US$ 4.1 million in consideration of a just over 33% stake in Kitov.ai, paid in part to the existing shareholders of Kitov.ai and in part infused into Kitov.ai as working capital.
Sarine is also lending Kitov.ai an additional US$ 2.6 million, in the form of a convertible loan, which, not before 01 January 2027 and not after 15 February 2028, can be converted, at Sarine’s sole discretion, into additional equity shares, bringing Sarine’s total stake in Kitov.ai to 51%.
The transaction was conducted based on Kitov.ai’s pre-money valuation of US$ 10.635 million. If Sarine does decide to convert into equity said convertible loan, possibly subject to shareholders’ approval, the following arrangements shall apply:
1: Sarine may be required to pay (during 2027 or during the first quarter of 2028) certain current shareholders a conditional earnout of US$ 1.0 million triggered by meeting defined profitability goals;
2: Kitov.ai, the company itself, not Sarine, may be required to pay (in 2029) certain current shareholders an additional conditional earnout payment of up to US$ 2.0 million, triggered and calculated by meeting certain sales and profitability goals;
3: The current shareholders of Kitov.ai may exercise (during the second half of 2029) a Put Option and sell to the Company all or part of Kitov.ai shares held by them at such time, based on a valuation set by an independent appraiser, at a consideration not to exceed US$12 million. This Put Option will not be in force, if before mid-2029 equity altering events occur, such as a merger, a public offering, etc.
If Sarine does not convert the aforesaid convertible loan, the aggregate consideration payable by Sarine for its 33% of Kitov.ai’s shares shall be ~US$ 4.1M and the said convertible loan shall bear interest and be payable to Sarine. The investment documents also include minority-protection clauses, throughout the different phases of the above transaction.
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