Letter sent to Scitex founder: Silicon Valley entrepreneur blasts Israeli firms leadership

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Davidi Gilo, the Silicon Valley entrepreneur whose hostile-takeover campaign for the Israeli high-tech powerhouse Scitex was rebuffed, has scathingly attacked the company's leadership.

"With all the due respect that I have for you, I think that from a business viewpoint Scitex is a chapter which is several years behind you," Gilo wrote to Scitex founder Efi Arazi earlier this month.

Gilo, a dual American-Israeli citizen, said in launching the first-ever hostile takeover of an Israeli firm this month that he would bring new leadership to the Herzliya-based company by finding emerging opportunities in the publishing and multimedia markets.

"In my opinion, this can only be achieved by growing and investing in Scitex's businesses, not by breaking the company apart," said Gilo.

Before the attack, Gilo told Dov Tadmor, chairman of the board of Scitex, that he intends to continue his plans to gain control of the firm, despite the decision by the board and principal shareholders to reject his proposal.

Gilo offered to purchase Scitex shares for a total of $856 million, at $20 per share, about 44 percent over market prices on the eve of his proposal. In the letter, Gilo said he is prepared to consider a higher price for Scitex shares during negotiations.

In a separate letter sent to Tadmor, Gilo accused Scitex's board of failing in its attempts to realize shareholder value.

"This is demonstrated by the precipitous decline in Scitex's shares during a period when the NASDAQ Composite Index was setting record highs and high-tech stocks, in particular, were the leading gainers," he wrote.

According to Gilo, a major shake-up in the board is the only way to restore the company back to good health.

Gilo cited his success in founding two publicly traded high-tech San Jose-area companies, DSP Communications and DSP Group, which have generated nearly $500 million in shareholder value over the past three years — a period when Scitex's stock value fell $1.3 billion.