Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI) is in talks to buy the Mega supermarket chain from the Alon Group.
Sources at Alon Group told "Globes" that "initial talks" only had taken place, and that the assessment was that the chances that the talks would mature into a deal were very low.
At the same time, Alon Group is energetically pursuing an agreement with the workers at Mega, and feverish negotiations have been taking place recently, with the participation of the Histadrut (General Federation of Labor in Israel).
Rami Levy Chain Stores is a profitable and stable supermarket chain, but it is still a chain with 30 branches and a lean headquarters that would find it difficult to absorb the Mega chain, which has 171 branches in different formats: a discount format; and a neighborhood store format. In addition, Mega controls (51%) the Eden Teva Market health food chain.
Rami Levy, who controls Rami Levy Chain Stores, is thought unlikely to want to take on Mega's unionized workforce. Rami Levy Chain Stores' employees are not unionized.
Furthermore, there is the question whether the anti-trust commissioner will allow a merger between the two chains, which would reduce competition in the marketplace. Given the commissioner's directives on regional concentration of supermarket chain stores, it is clear that, in any event, a full merger between Rami Levy Chain Stores and Mega cannot happen.
Published by Globes [online], Israel business news - www.globes-online.com - on May 3, 2015
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