Sarine Technologies Diversifies with Strategic Stake in Kitov.ai: Key Details, Financial Impact, and What Shareholders Must Watch

Overview: Sarine Technologies’ Major Move Beyond Diamonds

Sarine Technologies Ltd., the Israel-based leader in diamond tech solutions, has taken a bold step to diversify its business, announcing the closing of a strategic acquisition of a minority stake (33.02%) in Kitov.ai Ltd. Kitov.ai is an Israeli firm specializing in AI-powered automated visual inspection systems for high-mix/low-volume manufacturing – a cutting-edge sector with clients across multiple industries.

Key Points of the Transaction

• Sarine acquired 33.02% of Kitov.ai for a total cash consideration of US\$ 4.09 million.
• The investment comprises US\$ 2.34 million paid to existing Kitov.ai shareholders and US\$ 1.75 million infused directly into Kitov.ai as working capital.
• The deal closed on 18 August 2025.
• Sarine is lending Kitov.ai an additional US\$ 2.6 million via a convertible loan, which can be converted (at Sarine’s discretion) into more equity between January 2027 and February 2028, potentially increasing Sarine’s stake to 51% and making it a controlling shareholder.
• The deal also includes minority protection provisions, non-compete and non-solicitation clauses for both parties, and several conditional earnout and Put Option mechanisms, which could further impact future valuations and Sarine’s shareholding.

Strategic Rationale: Why This Matters for Sarine Shareholders

• Diversification: Sarine is proactively moving beyond its core diamond jewelry industry, which faces current challenges. Kitov.ai operates in multiple industries and leverages technologies familiar to Sarine (optical inspection, AI, advanced software).
• Growth Potential: Kitov.ai has an impressive client list, suggesting robust market acceptance and growth prospects.
• Management Continuity & Board Changes: Kitov.ai’s principals remain in charge post-acquisition, but Sarine will appoint a director and an observer to the new board. A new CEO and CFO will also be appointed, signaling a fresh strategic direction.

Key Financial Details and Price-Sensitive Elements

• Conditional Earnout Payments: If the convertible loan is exercised and Sarine takes control (51%), Sarine may need to pay Kitov.ai’s sellers an additional US\$ 1 million (2027/2028) if profitability targets are met. Kitov.ai itself may pay up to US\$ 2 million to sellers in 2029 if further sales/profit goals are achieved.
• Put Option: In the second half of 2029, sellers may force Sarine to buy out their remaining shares at up to US\$ 12 million (subject to independent valuation). This option lapses if Kitov.ai undergoes a major liquidity event (merger, IPO, etc.) before mid-2029.
• Minority Protection: Sarine has secured protections throughout the transaction phases, reducing risks for its shareholders.
• Funding: The transaction is funded from Sarine’s internal cash resources, with no impact on its issued share capital.
• Financial Effects:
  • No change in Net Tangible Assets (NTA) per share as of June 2025 (remains US cents 14.56).
  • Pro forma loss per share slightly increases (US cents 0.12 loss vs. previous US cents 0.05 loss), showing an initial drag from the acquisition, but this may change as Kitov.ai grows.
• Transaction Classification: With the aggregate value (11.9% of Sarine’s market cap), the deal is a “Disclosable Transaction” under SGX rules, meaning it is material and must be reported to shareholders.

Board and Governance Changes

• Two Sarine directors (Uzi Levami and Neta Zruya-Hashai) are proposed as Kitov.ai’s board director and observer, respectively, but no new service contracts are proposed.
• Kitov.ai’s employees have agreed to continue post-acquisition, minimizing execution risks.

What Retail Investors Should Watch

• This acquisition marks Sarine’s first step outside the diamond sector, with potential long-term transformation for the company’s business mix and risk profile.
• Future conversion of the loan and earnout/Put Option could lead to further cash outlays, changing Sarine’s financials and control over Kitov.ai – all price-sensitive events.
• Kitov.ai’s performance and Sarine’s management of the new stake will be critical – shareholders should watch for upcoming SGX announcements and performance updates.
• If Kitov.ai succeeds, Sarine could see growth and improved diversification; if not, losses could affect future results.

Conclusion: Why This Could Move Sarine’s Share Price

Sarine’s diversification into a high-tech AI inspection business is a significant strategic shift, responding to weakness in its core diamond market. The deal is sizable, brings new risks and opportunities, and sets up potential future changes in Sarine’s corporate structure and financials. Retail investors should monitor Kitov.ai’s trajectory, Sarine’s integration execution, and any further disclosures. The conditional payments, Put Option, and possible majority control are all possible catalysts for future share price movements, depending on how events unfold.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should perform their own due diligence and consult professional advisors before making any investment decisions. The information presented is based on publicly available documents and subject to change. The author and publisher assume no liability for any losses arising from reliance on this article.

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