Key Takeaways
- Sector: Healthcare, Healthtech & Medtech, Technology, Software & Gaming.
- Geography: Israel, United States.
Analysis
A legal showdown is unfolding in the medical aesthetics sector as Steel Partners, a prominent investment firm, has initiated legal action against Moshe Mizrahi, the founder and chairman of InMode. The dispute centers on the acquisition of the Nasdaq-listed company, with Steel Partners alleging that Mizrahi, despite holding a minority stake, exerts de facto control over InMode. This claim forms the crux of a lawsuit filed in the Haifa District Court, challenging the fairness of Mizrahi's proposed buyout offer.
The core of Steel Partners' argument is that Mizrahi's significant influence over InMode's board of directors compromises the independence required for evaluating acquisition proposals. The firm contends that several independent directors have undisclosed business ties to Mizrahi, thereby creating a conflict of interest. Steel Partners is seeking a court declaration that Mizrahi is the effective controller of InMode, which would necessitate stricter regulatory oversight and procedural safeguards for any acquisition bid. This legal maneuver aims to invalidate decisions made by InMode's board regarding the review of competing offers.
InMode, a company valued at approximately $900 million, has been the subject of acquisition interest for some time. Earlier this year, the company, which previously commanded a market capitalization of up to $7.6 billion, engaged Bank of America to explore strategic alternatives. This process saw an offer from South Korean firm Centroid, which Mizrahi countered with his own bid, reportedly in the range of $16-$17 per share, alongside investors including Meir Shamir's Mivtach Shamir. Mizrahi publicly stated his intention to keep the company within Israel.
Steel Partners entered the fray by acquiring a stake in InMode during 2025, accumulating approximately 3% of the company's shares. The firm then presented its own proposal to acquire 51% of InMode at $18 per share, intending to maintain its public listing. However, InMode's board ultimately decided against pursuing any of the offers at that time. Steel Partners asserts that its proposal was disregarded, and that Mizrahi's prior statements about InMode being a "family" and not for sale, coupled with his deep involvement in the sale process, indicate a lack of impartiality.
Following the initial failed sale process, Mizrahi re-emerged in June with a renewed acquisition proposal, this time leading a different investor group. During the interim period, Mizrahi increased his personal shareholding from 5.5% to 7%, while InMode also engaged in share repurchases. Mizrahi's latest offer of $16.20 per share values the company at around $950 million. In response, Steel Partners escalated its interest, proposing to acquire the entire company at $16.75 per share and demanding Mizrahi's removal from the board to ensure an unbiased review.
InMode recently announced the formation of an independent committee of three directors to evaluate the competing bids. However, Steel Partners remains skeptical, pointing to alleged dependencies between these directors and Mizrahi. Specific individuals cited include Dr. Michael Kreindl, a long-time business partner of Mizrahi; Dr. Hadar Ron, an early investor through IHCV and investor in other Mizrahi ventures; and Nadav Kenan, who previously co-founded a company with Mizrahi. The company's chairman, Shlomo Nes, was also appointed by the current board.
The lawsuit highlights a critical juncture for InMode, a significant player in the minimally invasive medical technology market, which has seen substantial revenue and profit declines in recent years. The outcome of this legal battle could significantly impact the company's future ownership structure and strategic direction, with broader implications for M&A activity within the healthtech sector.