First Israel Mezzanine Investors Fund (FIMI) is in talks to acquire Gadot Biochemical Industries Ltd. from controlling shareholder Delek Group Ltd. (TASE: DLEKG). Gadot Biochemicals' US and Chinese operations are not part of the proposed deal.
Delek, controlled by Yitzhak Tshuva, made a NIS 230 million write-off for Gadot Biochemicals in 2011. Gadot Biochemicals itself made a $66 million write-off in 2011, including $50.6 million for its Chinese joint venture Jiangsu Gadot Noubei Biochemicals Ltd., which began operations in 2009.
Delek delisted Gadot Biochemicals from the TASE following an offer to purchase last year, in which Delek bought NIS 8 million worth of Gadot shares. The offer to purchase was made at a 128% premium on Gadot's share price at the date the offer was published.
During 2011, Delek injected $33 million into Gadot Biochemicals through an owner's loan, which helped the company to carry out regular operations and repay its debts.
Delek owns 76% of Gadot Biochemicals and Oil Refineries Ltd. (TASE:ORL) owns 24%. The company, run by president and CEO Dan Mesika, produces and sells ingredients for the food industry: crystalline fructose, citrate salts, and enrichment minerals. More than 95% of the company's production is exported, which is why the company publishes its results in dollars.
Gadot Biochemicals suffered from falling profit margins in 2011, due to high prices for sugar (a primary raw material), as well as a write-down on its citric acid factory in China, which was not fully utilized, due to high prices for the company's raw material, cassava (a root for the production of ethanol).
Published by Globes [online], Israel business news - www.globes-online.com - on April 23, 2012
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