India's Jain Irrigation Systems bought the remaining half of the company for $35 million.
Kibbutz Naan has sold its 50% stake in NaanDanJain Irrigation Ltd. to its Indian partner Jain Irrigation Systems Ltd. (BSE: 500219). Source familiar with the takeover estimate the value of the deal at $35 million. Jain originally acquired half of the company in 2007 for $25 million.
Representatives of the kibbutz and Jain executives, who are in Israel to attend the Agritech 2012 Conference and Exhibition, signed the deal in Tel Aviv this morning. Under the agreement, NaanDanJain's manufacturing operations will stay in Israel at least through 2020. The company's factory at Naan produces irrigation equipment, and has 120 employees. It has 350 employees at other factories around the world.
Jain executives said that they would further develop the company's business and expand its export markets in the coming years. Jain is India's leading agroindustry manufacturer, with a 60% share of the domestic market. It has 7,000 employees in India, the US, UK, Switzerland, and Turkey. It says that it has invested NIS 125 million in NaanDanJain since acquiring its stake in the company, mostly to procure advanced production equipment, as well as in R&D and new infrastructures.
Jain director Amnon Ofen handled the takeover negotiations of NaanDanJain. He told "Globes" today, "The company exercised an option from the 2007 round, and Kibbutz Naan wanted to sell. In any event, the company's operations in Israel and other countries will not be affected. The objective is to foster and develop it. Since Jain's first investment in the company, its sales have increased 25%, and it grew in world markets despite economic crises." Jain managing director Anil Jain said, "This is a significant step in the strengthening of the ties between Israel and India. This is an immense opportunity to expand our activity in the world in areas that provide solutions to the growing global climate change, water, food and energy crises."
NaanDanJain CEO Avner Hermoni and Kibbutz Naan secretary Yoni Shilo also welcomed the deal, and talked about cooperation and the strong business ties between India and Israel. However, Kibbutz Industry Association general manager Amos Rabin has questions. "The most important question emerging from the sales of holdings to foreign companies is whether the manufacturing, R&D, and procurement of services will remain in Israel in the future. In this case, we're talking about a factory that was acquired by a company whose core business is in this field. This is a critical question and there is real concern about the future of NaanDanJain in Israel."
Rabin added, "The Kibbutz Naan members are wonderful people, and I am sure that they thoroughly considered their actions, even if it pained them to sell the company. I'm not saying that this was the wrong thing to do for the kibbutz and its members. From the country's perspective, it must do whatever necessary to ensure that the manufacturing stays in Israel, because a strong exporting industry is a growth engine for the economy."
Published by Globes [online], Israel business news - www.globes-online.com - on May 14, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012
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