B. Gaon Holdings Ltd. (TASE: GAON), owner of 16% of cosmetic company Ahava, today announced that an agreement in principle had been signed by Ahava's existing shareholders to sell all or part of their shares in the company. Besides Gaon Holdings, the main shareholders in Ahava are Shamrock Israel Growth Fund, the Livnat family, and Kibbutz Mitzpe Shalem.
As far as is known, the prospective buyer is Chinese investment giant Fosun, which has been acting in recent month to complete its acquisition of control in The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) from Delek Group Ltd. (TASE: DLEKG).
The agreement in principle states that the value of Ahava's business for the deal will be NIS 300 million. It appears that the background for Fosun's interest in the company is the trend among cosmetics companies towards penetration of the Chinese market.
The final number of shares to be purchased has not yet been settled, but in any case, Fosun is expected to become the controlling shareholder in Ahava. Gaon Holdings' investment in Ahava is listed in its books at NIS 18 million, significantly lower than the value for its stake according to the company value in the deal.
Gaon Holdings said that as part of the deal, it had been agreed that Fosun would hold at least 51% of Ahava's shares, and that if it holds less than 100%, an agreement would be signed arranging the company's management, protecting the minority shareholders, and arranging "the terms under which the minority shareholders can sell their holdings in Ahava."
Fosun has been granted exclusivity in negotiating with the Ahava shareholders for a period of 90 days, and completion of the deal is subject to, among other things, completion of due diligence and additional approvals.
The number of employees fell
Ahava manufactures and sells cosmetic products for skin care from minerals and mud produced at the Dead Sea. The company, which focuses on the skin care preparations segment, finished 2014 with NIS 183 million in revenue. Ahava has 225 employees at the end of 2014, 25% fewer than in 2013.
"Globes" recently reported that Ahava was planning to transfer its manufacturing activity from Kibbutz Mitzpe Shalem, located beyond the Green Line, to the area of the nearby Tamar Regional Council, and to invest NIS 10 million in building a new plant. The company denied that this was the result of pro-Palestinian BDS activities.
Published by Globes [online], Israel business news - www.globes-online.com - on September 1, 2015
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