US businessman Isaac Dabah has bought Sara Lee Corp.’s (NYSE:SLE) 23% stake in Delta Galil Industries Ltd. (Nasdaq: DELT; TASE:DELT) at $6.50 per share for a total of $27.7 million through GMM Capital LLC, which he controls.
With the completion of this transaction, Dabah will sign a shareholders agreement with Delta Galil founder and chairman Dov Lautman, which will resemble Lautman’s agreement with Sara Lee, ensuring Lautman a majority on Delta Galil’s board.
Sara Lee sold its stake in Delta Galil as part of its restructuring strategy announced early this year, which included splitting or selling all apparel activities. Seven Israeli and foreign parties were interested in Sara Lee’s stake in Delta Galil. Sara Lee sold the stake to GMM Capital at the recommendation of Lautman, who had first refusal rights to the shares.
Lautman said he was pleased by Dabah’s investment and becoming a strategic partner in Delta Galil, adding that he believed that Dabah’s extensive experience in branded apparel products would contribute to the company. Delta Galil has entered into the branded clothing market in recent years, mainly through Wilson (socks), Converse, Signature Jeans, and other companies, alongside Delta Galil’s main private label activity.
Israeli-born Dabah, 48, resides in the US, and has been in the textile and garment industry for 25 years. He acquired the Gloria Vanderbilt clothing brand in 1993, together with a group of investors, and sold it to Jones Apparel Group Inc. (NYSE:JNY) in April 2002. Under the agreement, Dabah was appointed CEO of Jones New York, Jones Apparel Group’s jeans brand, during 2003 and until the end of 2004. Jones New York has $1.1 billion in sales a year.
GMM Capital has made a number of investments in the retail, textile and clothing sectors. Dabah has also invested in Israeli real estate company Habas HZ Investments (1960) Ltd . (TASE:HABS) and in a denim factory in Kiryat Gat.
The shareholders agreement between the Lautman-controlled companies, which own 25% of Delta Galil, and GMM Capital, will come into effect when the Sara Lee deal is closed. Altogether GMM Capital will own approximately 25% of Delta Galil, after previously acquiring 2% of the company. Under the shareholders agreement, Lautman will hold the controlling interest in Delta Galil, and continue as chairman. He will have the right to appoint seven of the company’s twelve board members. Dabah will have the right to appoint three board members, and will probably be appointed acting chairman. The two other board members are external directors.
Published by Globes [online], Israel business news - www.globes.co.il - on August 16, 2005