SCHEDULE 13D/A: L.I.A. Pure Capital Increases Xylo Technologies Acquisition Offer to $5.25 Per ADS, Sells Pre-Funded Warrants

L.I.A. Pure Capital Ltd. has amended its proposal to acquire Xylo Technologies Ltd., raising its offer to $5.25 per American Depositary Share, while also selling a significant block of pre-funded warrants.

Summary

• L.I.A. Pure Capital Ltd. (Pure Capital) and its CEO, Kfir Silberman, filed an Amendment No. 1 to their Schedule 13D regarding Xylo Technologies Ltd.
• Pure Capital increased its proposal to acquire the outstanding share capital of Xylo Technologies Ltd. not held by Pure Capital to an updated purchase price of $0.13125 per Ordinary Share, equivalent to $5.25 per American Depositary Share (ADS).
• This updated offer represents an increase from the previous proposed price of $0.0925 per Ordinary Share, or $3.70 per ADS.
• The amended proposal includes Pure Capital's commitment to purchase restricted share units (RSUs) granted to Xylo's employees, officers, and directors that are subject to acceleration upon a change of control.
• The Issuer (Xylo Technologies Ltd.) will also purchase customary run-off insurance as of the effective date of the Arrangement.
• Xylo's board of directors stated on March 12, 2025, that it does not object to the Arrangement, noting it is fair.
• The Tel Aviv District Court ordered Xylo to convene two special general meetings of shareholders: one for all shareholders and another for shareholders excluding Pure Capital, Kfir Silberman, and those with ongoing business relationships.
• On April 16, 2025, Pure Capital sold 454,752 Pre-Funded Warrants to several purchasers for a total consideration of US $1,818,434, with a purchase price per warrant ranging from US $2.34 to $5.10.
• These warrants allow purchasers to acquire up to 18,190,080 ordinary shares underlying 454,752 American Depositary Shares of Xylo.
• Following the warrant sale, Pure Capital and Kfir Silberman no longer beneficially own any Pre-Funded Warrants, but continue to beneficially own 2,900,000 ordinary shares (underlying 72,500 ADSs), representing 8.77% of Xylo's outstanding ordinary shares as of April 14, 2025.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the increased acquisition offer price for shareholders and the board's non-objection, suggesting a higher likelihood of the transaction proceeding. However, the sale of warrants by Pure Capital introduces a new dynamic, and the ongoing court process still presents some uncertainty.

Positives

• Increased acquisition offer price for Xylo Technologies Ltd. shareholders from $3.70 per ADS to $5.25 per ADS, representing a significant premium.
• Pure Capital's commitment to purchase restricted share units (RSUs) held by Xylo's employees, officers, and directors, which could benefit these stakeholders.
• Xylo's board of directors has stated it does not object to the Arrangement, indicating potential alignment and a smoother path to approval.
• The Issuer's commitment to purchase customary run-off insurance as of the effective date of the Arrangement provides protection.

Negatives

• The sale of 454,752 Pre-Funded Warrants by Pure Capital, while generating capital for Pure Capital, transfers potential future ownership of Xylo shares to new purchasers, which could introduce new dynamics.

Risks

• The Arrangement is subject to approval by Xylo Technologies Ltd. shareholders, including a separate vote by shareholders other than Pure Capital and related parties, which introduces uncertainty regarding the transaction's completion.
• The ongoing legal proceedings in the Tel Aviv District Court regarding the Arrangement could face unforeseen challenges or delays.

Future Outlook

The document indicates that Xylo Technologies Ltd. is expected to convene two special general meetings of shareholders, as ordered by the Tel Aviv District Court, to vote on the proposed Arrangement for Pure Capital's acquisition of the remaining outstanding share capital. Pure Capital has committed to purchasing restricted share units of Xylo's employees, officers, and directors, and Xylo is expected to purchase customary run-off insurance upon the Arrangement's effectiveness.

Management Comments

• "The Issuer noted that its board of directors does not object to the Arrangement that is fair."

Industry Context

This filing details a specific corporate control transaction, an attempted take-private or squeeze-out by a significant shareholder (L.I.A. Pure Capital Ltd.) of Xylo Technologies Ltd. Such transactions are common in the technology sector, particularly for smaller companies, as a means for controlling shareholders to gain full ownership, streamline operations, or take the company private. The involvement of Israeli law and courts reflects the company's domicile.

Corporate Governance

Legal Proceedings

• Pure Capital filed an amended request in the Tel Aviv District Court (Economic Division) to convene a special general meeting of Xylo's shareholders to approve an arrangement under Section 350 of the Israeli Companies Law.
• The Tel Aviv District Court ordered Xylo Technologies Ltd. to convene a special meeting of shareholders on March 20, 2025, to vote on the Arrangement.
• On March 27, 2025, the Court further ordered Xylo to convene two general meetings of shareholders: one for all shareholders and another for shareholders excluding Pure Capital, Kfir Silberman, and related parties.

Related Party Transactions

• L.I.A. Pure Capital Ltd., a significant shareholder and its CEO Kfir Silberman (who is also Pure Capital's sole director and shareholder), is proposing to acquire the remaining outstanding share capital of Xylo Technologies Ltd. not held by Pure Capital. This constitutes a related party transaction.

Stakeholder Impact

• Shareholders (excluding Pure Capital): Potential to receive an increased cash consideration of $5.25 per ADS for their shares if the acquisition is approved.
• Shareholders (general): Required to vote on the proposed Arrangement in court-ordered special general meetings.
• Employees, Officers, and Directors of Xylo: Restricted share units (RSUs) granted to them are subject to purchase by Pure Capital if the Arrangement is approved, potentially providing liquidity for their equity awards.
• Xylo Technologies Ltd. (as an entity): Will purchase customary run-off insurance upon the Arrangement's effectiveness, providing protection for the company and its former directors/officers.
• Purchasers of Pre-Funded Warrants: Acquired the right to purchase Xylo ordinary shares (underlying ADSs) at a pre-funded price, potentially becoming new stakeholders in Xylo.

Next Steps

• Xylo Technologies Ltd. to convene two special general meetings of shareholders to vote on the Arrangement, as ordered by the Tel Aviv District Court.
• Potential completion of the acquisition of Xylo's outstanding share capital by Pure Capital, subject to shareholder approval and court processes.
• Pure Capital to purchase restricted share units from Xylo's employees, officers, and directors upon the Arrangement's effectiveness.
• Xylo to purchase customary run-off insurance upon the Arrangement's effectiveness.

Key Dates

Recommendation

Keywords

Xylo Technologies, L.I.A. Pure Capital, Schedule 13D/A, acquisition, tender offer, pre-funded warrants, corporate governance, shareholder meeting, Israeli Companies Law, Nasdaq, ADSs, ordinary shares