Fox-Wizel Ltd. (TASE: FOX) yesterday reported the signing of a memorandum of understanding for the sale of a quarter of the shares in candle and soap company Laline to an international personal care and cosmetics company. The part slated for sale in the first stage of the deal is half of the stakes of Laline founders Revital Levy and Merav Cohen, each of whom owns a quarter of the shares in the company - a total of 25% of the shares.
Fox-Wizel also has the right to buy 1% of Laline's shares from the founders to enable it to retain control of the company until the purchaser decides whether to exercise an option for acquiring all of Fox-Wizel and the founders' remaining shares. Fox-Wizel, controlled by Harel Wizel, holds a 50% stake in the company, while the founders own an aggregate 50%.
Laline's founders signed a memorandum of understanding with the international concern giving the concern the exclusive right for 40 days to buy 25% of Laline's share at a company value of NIS 350 million. The proceeds from the deal should therefore amount to NIS 88 million.
The buyer, described as a strategic partner, will be give an option to buy all the remaining shares in Laline - both those owned by Fox-Wizel and those owned by the founders - at a company value of up to NIS 450 million. The option will last for four years after the deal is completed.
The potential profit on the deal for Fox-Wizel and the Laline founders is impressive. Fox-Wizel acquired half of the shares in Laline in 2007 for NIS 13 million. Fox-Wizel also said that if and when the deal is completed, it expects to post a NIS 130 million capital gain. Completion of the deal is uncertain at this stage.
Levy and Cohen founded Laline in 1999. The company has 107 stores in Israel, in addition to 25 overseas franchise stores. Laline also owns another store in Times Square in New York City. In its most recent financial statements, Fox-Wizel stated that it was aiming to increase deployment of the stores in other international markets. The prospective deal fits in with the strategy presented by Fox-Wizel in its reports.
Published by Globes [online], Israel Business News - www.globes-online.com - on November 22, 2017
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