The share price of Technological Development and Automation Ltd.(TASE: TEDE) (Tedea) jumped yesterday after the company reported an agreement to sell its Noga Engineering subsidiary (in which it owns a 65% stake) for a total of $34 million (Tedea's share of the proceeds is $22.1 million, and its partner, Oudi Recanati, will receive the rest). After the deal is completed, subject to a number of conditions, Tedea is likely to post an $11 million after-tax capital gain on the sale.
Tedea, controlled by CEO Mordechai Gorfung, together with Recanati, acquired Noga Engineering in early 2013 for NIS 100 million, mostly through bank financing. Noga Engineering, founded in 1980 by Gustav Hirsch, is located in the Shlomi industrial zone. The company makes products for the chip processing industry. Its products are sold in over 50 countries worldwide.
$3 million of the proceeds from the current deal will be deposited with a trustee when the deal is completed in order to secure the obligations of the sellers (Tedea and Recanati) and indemnify the buyer in the event of a breach of their presentations or obligations under the agreement. $2 million of this sum will be released to the sellers nine months after the deal is completed, and the remaining $1 million will remain in trust for 18 months after the completion of the deal. The price for the deal is subject to adjustments to the debt that Noga Engineering still retains at the end of 2017, as well as agreements concerning Noga Engineering's working capital.
Tedea is a holding company controlled by a group of investors led by Gurfung, Amir Rahav, and Mati Raz that invests in electronics and chip processing companies. Tedea's market value is NIS 80 million.
In addition to its holding in Noga Engineering, Tedea fully owns Molodan Ltd. (TASE: MLDN-L) which itself invests in companies in a variety of sectors. Two months ago, Tedea invested (through private company Nitzavim, in which it has a 38.75% holding) in the acquisition of the activity and inventory of S. Cohen Metal Works, which imports, manufactures, and markets products for the construction industry. The price for the deal was NIS 24 million, of which Tedea's share was NIS 9 million.
Tedea's revenue totaled $10.7 million in the first half of the year, 24% more than in the corresponding period last year. Its operating profit was $1.1 million, and its net loss was $385,000, compared with a $64,000 loss in the corresponding period in 2016.
Published by Globes [online], Israel Business News - www.globes-online.com - on December 7, 2017
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