Delek Israel is in very advanced negotiations to purchase 20% of the shares of the Zappa Group, which operates a network of clubs for live performances. Calcalist has learned that the deal reflects a value of about NIS 100 million for Zappa, and that most of the investment, which will amount to about NIS 20 million, will be directed into the company. A minority will be in the pocket of owner Golan Einat. The deal is expected to be signed in the coming days.
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In recent months, Einat has been negotiating with several elements in the retail world to bring in a strategic partner to the group, but has not reached agreements on its terms. Among those interested in Zappa were Fox controlling shareholder Harel Wiesel, who sought to acquire control and did not reach agreements, as well as Phoenix Insurance Company.
Einat sought to continue to hold control alongside a group with strong management, financially sound partners with strategic value. Delek Israel was the first fuel company to enter into contacts with Einat, and the deal with it is made out of a strategic vision for synergy between the companies’ activities. The transaction will be carried out in stages: Delek will have the option to increase its share up to 49% of the shares, with Einat remaining in control.
The option for an additional 29% is at a higher value, so that the gross value after exercise is NIS 180-160 million, depending on the company’s performance.
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From the right, the owner of Zappa Golan, Einat, VP of Marketing at Delek Israel Keren Kupermintz, and CEO Yoram Eyal
(Photo: Micha Loveton)
The goal: a club with synergy
For fuel this is an interesting area for expansion. While its competitors in the field of gas stations and convenience stores have acquired urban supermarket chains such as Freshmarket and Super Yoda (Paz), and City Market (Sonol), Delek has chosen to create a different synergy for its business, though is still looking for opportunities in small urban writers as well. The company is controlled by Lahav L.R., which is controlled by Avi Levy and Eli Lahav, and Uri Mansour, who purchased 75% of Delek Israel’s shares from Delek Israel at a value of NIS 750 million at the end of 2020. Tshuva and Delek Group remained with 25% of Delek Israel. Idan Wells, CEO of Delek Group.
Under the new owners, Delek Israel has appointed a new management headed by Yoram Eyal, former head of retail at Paz. Eyal led a new strategic plan for the group, led by an aspiration to increase the retail and retail sector and the technology sector. The connection between Einat and Yoram Eyal helped to reach a deal.
The goal is to give the company’s customers access to the world of tickets to Zappa’s performances on preferential terms, and on the other hand to contact Zappa’s customers and attract them to the group’s cafes and gas stations and supermarkets, through one large customer club. Zappa is the first acquisition under the new owners and executives, who were looking for an acquisition that would differentiate it from the competition by joining the worlds of experience. This is how PlayCard did through connecting shopping and flights.
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Zappa Tel Aviv
(Photo: Zappa)
Zappa was established according to a concept that was at the time the first of its kind, a combination of performances and food. In recent years, Zappa has grown significantly, becoming a body that controls a significant portion of music performances in Israel. The range of activities also expanded, and over time they began to offer stand-up performances and lectures in the complexes. Zappa was founded in 2004 by the brothers Yoni, Noam and Ruthi Feingold, who held control until in 2014 they sold 40% of the group to Einat at a value of NIS 60 million. At the beginning of 2019, Einat increased his holding to 75%, and later purchased the remaining shares at a company value of NIS 80 million.
Zappa’s development plans under Einat suffered a blow with the outbreak of the corona plague in early 2020. The entertainment and tourism industries suffered the hardest blow. Zappa tried to overcome the closure of the clubs and the paralysis of the industry, which lasted for months, by joining the arc with performances in live clubs sponsored by Bank Hapoalim. Despite closing the clubs to the public, which severely hurt revenue, Einat managed to preserve the brand as successful and identified with performances of Israeli music.
Zappa’s revenue is about NIS 350 million a year. The field of concert tickets is perhaps the main anchor in the connection between the groups. Earlier this year, Zappa signed a partnership with German ticket giant Eventim, which operates toll roads and trains in Europe. The collaboration is done through a joint company under German control, into which all the activities of Zappa’s ticket company are transferred. The ticket company is considered the most profitable arm of Zappa and its core, and earns millions of dollars a year.
The Zappa site receives 2.6 million surfers a month, which the parties want to connect to the 53 million purchases of fuel products a year. Delek believes that Zappa’s customer base, about 3.5 million ticket buyers, whose data is stored in the company’s database, together with Delek’s customer base at gas stations, Mint convenience stores and especially in the Joe’s coffee chain, can be significant purchasing power and create synergies between parts of the group. . This includes purchasing tickets for performances by artists from abroad, which Zappa intends to bring to Israel as part of festivals he will organize.
Einat, who also owns Aroma Tel Aviv, which has been merged into Aroma Israel, Roldin, Captain Jack to the bone, registers a business leap. “A lot of people have made a change of course following the Corona. I turned down offers to sell Zappa for a lot of money. I was looking for the right strategic partner, and I chose good people to lead the company to a much higher place. A partner who makes decisions with you has no small value.”
Fuel on the way to the IPO
Delek’s operational experience should bring added value, in the form of an advanced customer management platform. Delek has invested large sums in customer management and consumer service. The Kupermintz Foundation, VP of Marketing and Business Development at Delek Israel, led the deal on its behalf.
Delek Israel is currently in final preparations for the issuance of a refueling company worth NIS 1.2 billion, not including real estate. Delek Israel currently has about 240 gas stations, 175 stations operated directly by it and more than 60 more it supplies fuels. 200 mint stores and 55 Joe’s coffee stores. The company concluded the first half with a 17% improvement in revenues to NIS 1.7 billion, beyond a positive operating profit and a net profit of close to NIS 50 million, after 2020. Was challenging for it, and it ended up with a loss of more than NIS 300 million, mainly due to a provision for discontinued operations.
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