Sources inform "Globes" that the Schocken family, publishers of newspaper "Haaretz", has sold 25% of the group to a German investor. It is believed the stake was sold at a value of $100 million for the group. Negotiations between the parties were conducted over several months.
The Haaretz Group includes the "Haaretz" national daily newspaper, local newspapers, 24% of Internet portal Walla!, which has a market cap of $16 million, and financial website "TheMarker".
Haaretz publisher Amos Schocken said in response that, "The Haaretz Group is conducting negotiations on raising capital for the group, for the purposes of expanding investment in the group's newspapers and in the Internet. For the purposes of the capital raising exercise, the group is valued at some $100 million, before the investment. The group is still examining the possibility of buying control of Walla!, which it currently controls jointly with Bezeq."
Schocken also said that "We are mainly negotiating with entities that have no substantial business activity in Israel."
The entry of a German investor into the Haaretz Group could be perceived as closing a circle for the Schocken family. It was once one of the wealthiest families in Germany before immigrating to Palestine in 1933 after the Nazi’s rise to power. The family’s businesses included grocery stores and publishing, as well as an art collection. The family still owns property in Germany.
In 1939, Zalman Schocken bought “Haaretz”, and it has been wholly owned by the family ever since. The current owners are “Haaretz” chairman and published Amos Schocken; Schocken Publishing House CEO Rachel Idelman, his sister; and Hillel Schocken, a Jerusalem architect.
Negotiations between Amos Schocken and the German investor lasted for several weeks, mediated by Avi Primor, a former Israeli Ambassador to Bonn, who has extensive contacts in Germany. So far as is known, the investor is not Axel Springer, the name mentioned in the media, but a businessman with interests in the media and other sectors, and who views Israel as a developing media and Internet market.
Sources add that the investment in Haaretz is purely financial, and that the Schocken family demanded a commitment from the investor that he would not intervene in the newspaper’s content. It was also decided that three members of the Schocken family would serve on the board: Amos, Rachel, and Hillel, as well as Primor, who will represent the German investor.
Industry analysts today struggled to explain the high company value for the Haaretz Group. The “Haaretz” newspaper has 60,000 subscribers and an estimated value of $20 million; the chain of local papers has an estimated value of $1-2 million; the value of the stake in Walla Communications Ltd. (TASE: WALA) is worth $15-16 million; and the value of other websites is unknown. Even taking a goodwill premium into account, it is still hard to reach such a high company value.
Published by Globes [online], Israel business news - www.globes.co.il - on August 10, 2006
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