A short time after completing the sale of control of Tnuva Food Industries Ltd. to Chinese food giant Bright Food, Apax Partners is now buying control (80%) of Israeli catering company Schulz. Estimates are that the deal is being carried out at a company value of NIS 60-70 million. Schulz was founded in 1979 by Yechiel Schulz, and is today jointly managed by his sons, Oren and Nir Schulz. The company is one of the ten biggest companies in the catering industry, with an annual turnover of NIS 1.5 billion. The companies operating in the sector operate cafeterias in workplaces, and also provide similar services for the institutional market.
The sector’s primary source of growth is the privatization of organizational and government catering systems. The sector is considered high-risk, and profitability is particularly low. Schulz has an impressive client list, which includes companies such as Amdocs Ltd. (NYSE: DOX), Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), Rafael Advanced Defense Systems Ltd., Comverse Technology Inc. (Nasdaq: CMVT), and others. Two and half years ago, the company won an IDF tender to supply meals to military bases for 22 years. According to Oren Schulz, the deal is worth NIS 70 million annually, and a cumulative NIS 1.5 billion.
Oren Schulz told “Globes” today that the deal between the parties was signed before the Passover holiday last week, and that the closing is expected to take place this week. Schulz added, “The most important thing, from our perspective, is that we continue to work at the company, and to manage it.” Schulz admits that the profitability in the sector is very low, and it will therefore be interesting to see how Apax plans to improve profitability. After buying control of Tnuva, Apax, under Israel CEO Zehavit Cohen, sought to reap quick profits, and, among other things, raised the price of cottage cheese, hard cheese, and soft white cheese (Israeli staples), taking advantage of Tnuva’s monopoly in the market. The prices were raised following the findings of the McKinsey consulting firm report, which, along with Tnuva chief economist Dr. Shula Pesach, concluded that demand for these items was strong, and prices could be raised at least 15% before affecting demand.
Published by Globes [online], Israel business news - www.globes-online.com - on April 13, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015