In an announcement to the Tel Aviv Stock Exchange (TASE), Victory Supermarket Chain Ltd./ (TASE: VCTR) became the first concern to state that it would bid to acquire full ownership of the Mega chain, in partnership with "a European leader in the retail food sector." The price was not mentioned in the announcement, nor what would become of the chain's employees.
Victory CEO and co-controlling shareholder Eyal Ravid said that more than a few questions were disturbing him, and after he has the answers to them, "It will be easier to move things forward at Mega."
"Globes": Acquiring Mega involves both opportunity and risk. How capable are you of merging a chain with four times as many branches as you have now?
Ravid: "Considering the way Mega has been run up until now, our management ability is much better. We are among the few private chains able to manage both neighborhood stores and out-of-town stores. Every business has risks."
What status will Mega workers have if you acquire the chain?
"We haven't thought about that yet. It's no simple matter. There are still several questions bothering me. When you buy a business from a receiver, you buy it free of debt. The first question is whether the buyer has to assume the past commitments to the workers. When I recently bought branches from Mega, the workers were laid off earlier, and then I hired them. Does the buyer have to hire the employees with their current terms?
"I'm not talking about wages; I'm talking about the wage value. There are workers who get 20 vacation days a year, and even 30 days. That alone is worth NIS 40 million a year. An ordinary worker gets 12 vacation days a year, and if he's really good, he gets 15. I don’t have a problem with what they're getting, but it's an entirely different price. All of this has to be priced.
"The second problem with Mega is rent. What rent do we pay for Blue Square Real Estate Ltd. (TASE: BLSR) branches? There are branches that we know have a very high rent. Can anyone pay that? The answer is no."
On a scale of 1 to 100, how important is it for you to make this deal?
"I like where I am now. We'll have 42 active branches at the end of February. The deal with Mega in Town might put me in a better position."
Is an announcement to the TASE like this good for the share?
"That's not what was involved here. According to a legal opinion I received, I had to make a report."
Published by Globes [online], Israel business news - www.globes-online.com - on January 21, 2016
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