Delek Motors CEO Gil Agmon's strategy of turning the veteran auto importer into a holding company with additional spheres of business is materializing. The company yesterday signed an agreement to acquire sustainability group Veridis. The acquired group deals in the environment, desalination, power production, and energy solutions.
As part of the deal, Delek Motors agreed to acquire 70% of OCM Luxemburg, including its owners' loans, from international fund Oaktree Capital Management. OCM Luxemburg is a holding company with no activity, which holds Veridis and the owners' loans granted to it. The acquisition price is NIS 992 million, reflecting a value of NIS 1.42 billion for OCM. Delek Motors will pay for the acquisition with bank loans and from its own resources. NIS 100 million of the price will be recorded as a one-year seller's loan.
At the same time, Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) will buy 10% of OCM Luxemburg at the same company value as in Delek Motors' investment: 5% from Oaktree and 5% from the exercising of an option granted by Oaktree to the Israel Infrastructure Fund, when it sold it 20% of the shares in the holding company last July.
Veridis was founded in Israel in 1993 by French concern Veolia International and Uri Starkman. The company operated under the name Veolia Israel for 22 years, after which it was sold in 2015 to Oaktree for $450 million. Following the acquisition, Oaktree appointed Ariel Kappon CEO of Veolia Israel, and changed the company's name to Veridis Israel in January 2017.
After signing the acquisition agreement, Delek Motors yesterday revealed initial figures for Veridis's activity showing that the group's revenue totaled NIS 887.4 million in 2016, with a NIS 113.2 million operating profit and NIS 227.2 million EBITDA, giving a 25.6% ratio of adjusted EBITDA to revenue.
The figures also show that the group's assets totaled NIS 2.246 billion at the end of 2016, while its liabilities totaled NIS 1.796 billion and its shareholders' equity was NIS 372 million.
Desalination facility in Ashkelon
Delek Motors' announcement stated that the reports had been prepared according to IFRS standards applying to public companies in Israel. The company added that it had not yet received financial figures for the holding company for 2017.
Delek Motors' main current business is importing Mazda, Ford, and BMW cars to Israel. The company finished 2017 with NIS 3.41 billion revenue and a NIS 349 million net profit, compared with NIS 3.43 billion revenue and a NIS 370 million net profit in 2016.
Veridis's main environmental activity is providing collection services for home and industrial waste to municipalities and local councils. The company also sorts, buries, and burns hazardous waste. Among other things, it owns sorting facilities in Afula and Hiriya, (which supplies fuel to Nesher Israel Cement Enterprises), and buries waste in Israel. Veridis owns the only facility in Israel for burning hazardous waste, which is supplied by a government company.
Veridis is an equal partner with the IDE group in the desalination facility in Ashkelon. The plant's production capacity is 120 million cubic meters of water a year. Veridis also owns 59.5% of the facility's operating and maintenance company.
In energy, Veridis installs and services heating and air-conditioning systems and provides operational and maintenance services for the power plants linked to the Ashkelon desalination plant. Veridis also operates steam plants in Kibbutz Maanit and Kibbutz Gan Shmuel and installs heating and cooling systems in hotels. The company has a 20% stake in the power plant at Mishor Rotem in the Negev, with OPC Energy Ltd. (TASE:OPCE) owning the other 80%.
In order to complete the deal, Delek Motors will have to obtain approval from the Antitrust Authority, the Israel Water Authority's water desalination administration, and the Public Utilities Authority (electricity). Completion of the deal is planned within 180 days, with each party having an option to extend this period by an additional 30 days. If the deal is not completed by July 2 and the delay is not the seller's fault, the proceeds will be increased monthly at an annualized rate of 11%.
Published by Globes [online], Israel Business News - www.globes-online.com - on March 5, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018