The Tnuva Food Industries Ltd. board is considering a $750 million acquisition offer made two weeks ago by Markstone Capital Partners Group LLC for the company. However, Tnuva CEO Arik Raichman values the company at $1 billion and upward.
Tnuva has already received four or five acquisition offers, including offers from Apax Partners and Cerberus Capital Management, all of which have valued the company at around $700 million. Despite this, both Tnuva executives and Raichman’s associates still feel that “Tnuva is an attractive proposition for investors and its value at sale will rise far in excess of the offers that have been made.”
At a conference in June last year, Reichman’s senior advisers gave estimates that were lower than previously expected. Adv. Ram Caspi valued Tnuva back then at $600-800 million only, not far from Markstone’s current latest offer, while Prof. Yitzhak Swary gave Tnuva a value of $800 million-1 billion.
To sell a stake in Tnuva of around 20% to an investor as planned, the proposal must pass several more approval stages, the outcome of which is unclear. Moreover, some bidders will only be willing to acquire a controlling interest of 50% and upward (as preferred by Markstone). The stages that still need to be completed before an investor can acquire a stake in Tnuva include its conversion from a cooperative to a company. Reichman is in dispute with a number of dairy product producers as to whether the conversion was approved by previous conferences of cooperative members. Such a move requires a majority of 75% of the cooperative’s 630 shareholders, among them kibbutzim and moshavim, some of whom no longer produce dairy products.
Tnuva posted a profit of NIS 176 million, including profit from the sale of a dairy in Jerusalem, on NIS 5.3 billion sales in 2005, and NIS 150 million profit on NIS 4.7 billion in 2004. The company declined to comment on the report.
Published by Globes [online], Israel business news - www.globes.co.il - on September 21, 2006
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