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The Shufersal share has concentrated high turnovers, sometimes of more than NIS 100 million, during some trading days in the past month. The market wondered who was collecting the company’s shares, but there is still a question mark over the identity of the buyer. An American group was found to be investigating the matter, and two or three local officials also came up.
Today, shortly after the end of trading, the fog around the factors that are keeping an eye on the company has dissipated. Brothers Shlomi and Yossi Amir submitted a proposal to the Shufersal board of directors to acquire control of the company at a value of approximately NIS 7.5 billion. This is while the company’s market value today was NIS 7.21 billion at the end of trading. The brothers are offering Shufersal a NIS 2.464 billion share for the Shufersal board of directors. After dividends and additional benefits, this is an offer of NIS 2.066 billion to the retail chain.
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Right: Yossi and Shlomi Amir
(Photo: Morag Bitan)
However, if Shufersal’s share price falls by 10% or more until the shares are allotted, the Amir brothers want to adjust the purchase price so that it will also fall by 10%.
In addition the brothers are demanding the appointment of seven directors on the company’s board of directors upon completion of the transaction.
Another demand of the brothers is an answer from the Shufersal board of directors within ten days. Their offer is valid for this period only. The two made a similar offer in the past, also for a short period of time, to buy a share of Pez, but in the end, the energy group acquired the one that shook hands with them and became the buyer of the year.
The offer caused a stir in the Shufersal board, which will probably not accept the offer. This is both because it is very short on time, both because it is at a negligible premium above the market price, and because of its requirement for brothers to appoint seven directors on their behalf. The fact that the two require a period of non-competition with Paz may also have weight in the decision of the Shufersal board of directors headed by Vadmani, who will try to avoid offenses in this sector.
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Shufersal Deal
(Eran Granot)
The problem of the Amir brothers will be facing Paz. The two still serve as advisors to the company, and are exposed to all the secrets of the company’s retail arm, Freshmarket. As far as Paz is aware, the current proposal of the two is taken seriously, long before the end of the period of non-competition, and both legal and administrative measures are expected to be taken against them; Paz is considering the possibility of removing them immediately from any contact with Freshmarket, and preventing them from real competition for the holding in Shufersal.
Among capital market sources, there is a belief that what worked with 40 medium-sized supermarkets may not necessarily succeed in a huge chain – the largest chain in the country, with sales of many billions of shekels a year and hundreds of branches.
Another item that does not make sense in the offer is a dividend of NIS 1.2 billion that Shufersal will distribute after the transaction, during which NIS 2.066 billion will flow into the company. This means that Shufersal’s capital will increase by only NIS 800 million following the transaction.
In the agreement with the Paz chain, the Amir brothers undertook to refrain from making a purchase transaction that is contrary to the merger agreement; Not to sell Paz shares on the stock exchange six months from the date of completion of the transaction in January; Continue to work in Freshmarket half a year from the date of completion and another half year as consultants; And not be in competition with the company for three years.
The move by Shlomi and Yossi Amir is dramatic, and will not necessarily be accepted positively in the capital market. This is despite Shufersal’s controversial board of directors, which includes almost no members with experience in the retail sector. The decision to oust Itzik Aberhahn and appoint Ofer Bloch in his place was made in the cold of the market, which sent the stock down.
But such a move to buy the big competitor, while the brothers are still active in the fresh market, is a problematic move in every sense. Nor does the fact that the price the two are offering are low and unlikely to be accepted, obscure how controversial their move yesterday is.
The brothers had a good reputation as the founders of a four-handed chain, which they developed through a series of acquisitions into a large chain of 40 supermarkets. They issued it on the stock exchange in 2019, during which it generated NIS 250 million in dividends and NIS 170 million in the sale of Freshmarket shares to institutional entities. This is in addition to management fees of millions of shekels that they attracted a year.
The two began their activities in the retail sector in 1995, with two supermarkets in Haifa and Kiryat Bialik. They were the sons of the head of the Nesher Council, David Amar, who was a prominent Likud activist. The chain developed slowly and in the years 2016-2008, 17 branches were acquired.
At the beginning of 2017, the chain of two purchased 13 branches of Lahav Warehouses for NIS 85 million. The seller was the Dan bus company, which acquired the chain from businessman Eli Lahav in 2010.
The brothers’ first attempt to make an IPO on the Tel Aviv Stock Exchange in 2018 failed. They refused to accept a value of NIS 700-650 million in the offering, led by Discount, and demanded a value of NIS 750 million. In the second attempt made a year later, in 2019, they are already at that value.
Now they are trying to jump again a grade in the field of retail, to the largest company in the field. It will not be easy, and in the proposal in question, if not significantly improved, the chances of success are low. This will be enough to break the delicate fabric of relations with Paz, and may also hurt the good name they have had so far in the capital market.