Sources inform ''Globes'' that Mivtach Shamir Holdings Ltd. (TASE:MISH), controlled by chairman Meir Shamir, will offer to buy out its partner in Tnuva Food Industries Ltd., Apax Partners at a value of NIS 5.5-6 billion including debt. Apax's stake in Tnuva is estimated at €300-350 million (NIS 1.5-1.75 billion).
Apax will reportedly accept the offer, which would give it a return of 250-300% (including dividends from Tnuva) within three years on its €152 million investment. Apax has also received €258 million in dividends from Tnuva. Apax said in response, "No comment."
Mivtach Shamir will make the offer as soon as the Tel Aviv Stock Exchange (TASE) allows trading in the company's shares to resume. Meir Shamir has been consulting with aides to finalize the offer, as well as with Merrill Lynch Israel country manager Yoram Inbar to organize a syndicate of financial institutions to participate in the deal.
Apax owns 56.1% of Tnuva and Mivtach Shamir owns 20.7% through their joint venture. Meir Shamir wants to reach a stake of 55-60% in the company, and sell 17-20% to his investment institution partners. Now that Tnuva's financial reports will be published properly, as part of Mivtach Shamir's settlement with the TASE and Israel Securities Authority to resume trading in its shares early next year, the institutions will have no problem owning stakes in Tnuva, which is a non-tradable asset.
Mivtach Shamir should have no problem securing the NIS 1-1.2 billion its needs finance the acquisition of control of Tnuva. Mivtach Shamir is liquid following the distribution of a large dividend by Tnuva early this year, and the company is already in talks with Bank Hapoalim (TASE: POLI) to secure financing. Meir Shamir recently met Bank Hapoalim CEO Zion Keinan to discuss the matter, and the bank will reportedly provide NIS 400-600 million.
The parties will still have to resolve the issue of the Antitrust Authority investigation into Tnuva's monopolistic conduct, and the refusal of Apax Israel CEO and former Tnuva chairwoman Zehavit Cohen to cooperate with the investigation. The investigation has greatly embarrassed Apax, and has jeopardized the raising of its eighth fund. Meir Shamir may agree for Tnuva to pay a fine to settle the case.
A well-informed source close to Apax said that the firm was considering whether to continue operations in Israel, on the grounds that Tnuva is unlikely to greatly increase in value in the coming year. Apax also owns 76.8% of Psagot Investment House Ltd., which it acquired in 2010 at a value of NIS 2.71 billion - a figure that is currently considered overvalued and unlikely to create substantial added value for Apax.
Published by Globes [online], Israel business news - www.globes-online.com - on November 6, 2011
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