Clal Industries, controlled by billionaire Len Blavatnik, is proceeding with its sell-off of activity outside its core business, and in which it has a minority holding. The company today reported that it was in negotiations to sell its 19% stake in Israel Shipyards to its partners in that company, according to the size of their holdings, for NIS 138 million, reflecting a NIS 700 million value for Israel Shipyards. Clal Industries has held its stake for 20 years. The announcement was made by Gold Bond Group Ltd. (TASE:GOLD), controlled by Shlomo Fogel and the Schmeltzer family, which currently owns 20% of Israel Shipyards. If the negotiations culminate in an agreement, Gold Bond is slated to acquire 4.5% of Israel Shipyards' shares for NIS 35 million, thereby increasing its stake to 25%.
The other partners in Israel Shipyards are chairman Samy Katsav (20%), and Sko-Car (a private company owned by Fogel and the Schmeltzer family - 41%). If the deal goes through, their share of Israel Shipyards will rise to relative to their current holdings.
Profit plunged 40% in 2016
Most of Israel Shipyards' business is in designing, building, maintaining, and providing services for vessels - mostly naval, but also civilian (the marine department). The company also loads and unloads cargo and provides port services (the port department). In 2016, the company also began producing cement. Israel Shipyards has 450 employees, all in Haifa.
Published last month, Israel Shipyards' reports revealed that the company's core business of construction of and providing services for vessels declined substantially. The company reported that its revenue dipped 2% to NIS 505 million, while its profit plunged 40% to NIS 28 million.
Israel Shipyards' gross profit was down 7% to NIS 80 million in 2016, and its operating profit dropped 21% to NIS 42 million. A negative change in financing expenses also affected the company's net profit. A breakdown by segments shows that decline in the company's business was mostly in its marine sector of construction of and providing services for vessels, in which revenue was down from nearly NIS 400 million in 2015 to NIS 215 million in 2016, nearly a 50% fall, while gross profit was off 30% to NIS 34 million. Israel Shipyards reported that the proportion of its revenue and gross profit from construction of naval vessels accounts for over 90% of the revenue and gross profit of its marine department. The company did not state so explicitly, but its reports indicate that one of its customers had accounted for NIS 363 million of its marine department revenue in 2015, 91% of the total. Revenue from this customer plummeted 55% to NIS 160 million in 2016. The company explains that although it has the only shipyard in Israel, it is competing "against a large number of foreign shipyards, including those in maritime and industrial powers," in both naval and civilian vessels.
Clal Industries' negotiations to sell its holdings are taking place shortly after it announced its wish to sell 14% of its 30% stake in beverages company Jafora-Tabori, controlled by Kerur Holdings Ltd. (TASE: KRUR), for NIS 223 million, a deal reflecting an impressive NIS 1.6 billion value for Jafora-Tabori.
Kerur, controlled by Ronnie Gat and Shlomo Rodav, decided against exercising its option to buy Clal Industries' shares in Jafora-Tabori. "Globes" later reported that the party interested in acquiring Clal Industries' stake was Kharis Capital, a Swiss private equity fund specializing in investments in retail business and consumer products. Clal Industries' decision to sell its shares in Jafora-Tabori is in line with its strategy of selling off business in which it has a minority holding and focusing on its core business. Clal Industries, managed by Avi Fischer, was delisted from the Tel Aviv Stock Exchange (TASE) three years ago through an offer to purchase for the public's shares published by Blavatnik, and was separated completely from the capital market in 2015, when it redeemed NIS 1.5 billion in its bonds.
Published by Globes [online], Israel Business News - www.globes-online.com - on April 24, 2017
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