20 years after car importer Universal Motors Israel Ltd. (UMI) was founded, General Motors Company (NYSE: GM) is selling its 10% stake in the company for NIS 68.5 million, giving a company value of NIS 685 million for the dealership. The price was set in negotiations between the parties. UMI is buying GM's shares. When the deal is closed Kardan Israel Ltd. (TASE:KRIS) and Eastern Automobile Marketing Company (1994) Ltd. will each own half of UMI.
Until 1993, GM had two representatives in Israel which imported its cars: Leo Goldberg Ltd., which Kardan Israel acquired from the founder's heirs; and Eastern Automobile Marketing Company, owned by the Eini family. That year, GM proposed merging the two dealerships to create UMI. GM owned 10% of the company and the other companies each owned 45%.
Kardan Israel is considering merging UMI with its leasing company, Kardan Vehicle Ltd. (TASE: KVCL) (Avis Israel). Kardan Israel and Eastern Automobile Marketing Company each own 38% of Kardan Vehicle. The two companies asked GM if it wanted to be a shareholder in the new company, but GM decided to sell its stake in UMI instead.
UMI imports GM brands Buick and Cadillac, as well as Chevrolet and Isuzu. It posted NIS 1.9 billion revenue in 2012, 26.5% less than in 2011, and its net profit plummeted to NIS 5.9 million from NIS 107 million. UMI's share of the Israeli car market was 4.8% in 2012.
Published by Globes [online], Israel business news - www.globes-online.com - on August 25, 2013
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