Kibbutzim mull selling Tnuva stake

Tnuva cottage cheese  picture: Tamar Mitzpi

The kibbutzim are angry about the delay in appointing a head of the Bright Food office in Israel.

The kibbutzim buyers organizations have begun to consider selling their 26% stake in Tnuva Food Industries Ltd. A month ago, a meeting of 12 kibbutzim took place, at which the kibbutz heads decided that a deadlock had been reached as a result of the delay in the appointment of someone to head the Israeli office of Bright Food, which owns a controlling interest in Tnuva, and a vice-chairman of Tnuva to replace Yossi Shahar, who is stepping down. It was decided at the meeting to commission a valuation for the company that will enable kibbutzim wishing to sell their share to do so.

The kibbutzim are angry about the delay in the appointment, and about the fact that the position has not been filled. Their impression is that Bright Food is afraid to make a decision. They are frustrated that they did not sell their holding in Tnuva when Bright Food acquired control of it, while Tnuva's value has plunged since the acquisition.

Which bank will be selected to make the valuation has not yet been decided. The main part of the dispute has been meanwhile been solved, however, after Bright Food two weeks ago appointed Haim Gavrieli as its representative in Israel and as Tnuva vice-chairman. Sources familiar with Tnuva today said that even after Gavrieli's appointment, the valuation process would continue, and that some of the kibbutzim might sell their Tnuva holdings.

The banks commissioned a valuation from the Tasc consultant firm a year ago. The valuation showed that Tnuva had lost 40% of its value since Bright Food completed its acquisition of the controlling interest 18 months ago. Tasc's valuation was NIS 4.5-5 billion, compared with the NIS 8.6 billion value at which Bright Food acquired control.

Gavrieli is taking up his position at a very difficult time for Tnuva. He faces difficult and intensifying competition, falling sales, increased import quotas for meat and tomatoes, and Tnuva's loss of market share in 2016.

Bright Food, the parent company of Bright Dairy, acquired control of Tnuva three years ago. There have since been three cases of corruption. In recent months, it was reported that a former Bright Food VP, who was a director in Tnuva, had been sentenced to three years for taking a bribe of over 1.2 billion yuan. Two years ago, it was learned that former Tnuva chairman Guo Benheng had been investigated for corruption and sentenced to a six-year prison term. In August 2014, former Bright Food chairman Wang Zongnan was put behind bars for embezzling $31 million.

Published by Globes [online], Israel Business News - www.globes-online.com - on June 19, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Tnuva cottage cheese  picture: Tamar Mitzpi
Tnuva cottage cheese picture: Tamar Mitzpi
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