Sami Sagol buys historic Rothschild Blvd house for NIS 40m

Sami Sagol

The house, marked for preservation, once belonged to Tel Aviv cofounder Yosef Eliyahu Chelouche.

In July 2016, Sami Sagol signed a deal to sell 80% of the shares in Keter Plastic to foreign fund BC Partners at a company value of $1.7 billion. It now emerges that Sagol has begun investing his exit money. The aging industrialist, one of the 10 wealthiest people in Israel, recently completed his acquisition of one of the last buildings for sale on Rothschild Boulevard, in the heart of Tel Aviv, for NIS 40 million.

The ground floor of the building, located on a 545-square meter lot at 9 Rothschild Boulevard, on the corner of Rothschild Boulevard and Herzl Street, is currently used for retail trade, and the two other floors, with a total of 850 square meters in built up space, are leased for offices. It is likely that Sagol, who rents his current offices on the same street, will want to move them to his new building at some stage.

The building currently has several tenants, including a clothing store and a cafe-restaurant on the ground floor. Renters of the office space include public company Ellomay Capital Ltd. (NYSE MKT: ELLO), controlled by Shlomo Nehama. The property currently generates an estimated NIS 1.5 million in annual rent.

Eliyahu Chelouche House

The building bought by Sagol was the historic home of Tel Aviv cofounder Yosef Eliyahu Chelouche. It is marked for preservation under strict limitations, which adds to its value. The house, which was constructed in the early 1930s, was owned by the Chelouche family. Yosef Eliyahu Chelouche was the son of Aharon Chelouche, a cofounder of the Neve Tzedek neighborhood and among the leaders of the Sephardic Jewish community in the town. His son Moshe was mayor of Tel Aviv for 10 days in 1936.

The website of the organization of the families of the founders of Tel Aviv states that Yosef Eliyahu Chelouche's commercial activity reached its peak in 1920-1932. He was among the initiators and founders of the Trade and Industry Bank and the Kupat Haam Bank. The land on which the Carmel Market is located, including the Allenby movie theater, and stretching to Gan Meir, was owned by the Chelouche family, and was given as a gift to the Tel Aviv municipality "in order to build a large public garden." Additional areas were purchased along the Yarkon River as part of Yosef Eliyahu Chelouche's vision for a port in the area of the Yarkon River estuary. The municipality expropriated this land in the 1950s for Hayarkon Park. The popular Carleton Cafe, where poet Avraham Shlonsky used to sit, was once located at the house at 9 Rothschild Boulevard.

The road to Keter Plastic

Sagol, 74, began his road to success in 1948 in a small workshop developed by his father, Yosef, behind Jerusalem Boulevard in Jaffa, shortly after the family immigrated to Israel from Turkey. When he entered business, Sami Sagol turned the tiny business into a leading international company and a byword for plastic furniture.

Keter makes plastic products for home use, storage products, boxes, shelves, etc. The company has thousands of employees at its 30 plants in Israel, the US, and Europe, and markets its products all over the world. Keter's business in Israel is negligible, compared with its international activity. The company's local activity contributed only 5% of its sales and 7.5% of its gross profit in 2015.

The process of selling the controlling interest in Keter Plastic, which took over a year, was managed on Sagol's behalf by former McKinsey Israel head Dr. Jonathan Kolodny, together with Rothschild Bank. By July 2016, the prospective buyers had been narrowed to CVC Capital Partners, investment bank Goldman Sachs, and BC Partners, and the deal was eventually signed with the latter.

The outline of the sale was changed after Sagol realized that he would be unable to obtain his asking price of $2 billion for full ownership of the company. In the final deal, Sami Sagol and his brother, Yitzhak, sold 80% of the shares in the company at a company value of $1.7 billion, with the buyers being granted an option to acquire the remaining 20%, similar to the way Berkshire Hathaway acquired the Wertheimer family's shares in Iscar Ltd.

Sagol was granted several honorary titles last year, including Entrepreneur of the Year by consultant and accounting firm Ernst & Young, and Man of the Year by "Globes."

Published by Globes [online], Israel Business News - www.globes-online.com - on May 11, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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