Cargal Ltd. has acquired 72% of Plasto Sac Ltd. (TASE:PLST) at NIS 25.20 per share for a total of NIS 129.5 million. The price tag gives Plasto Sac a company value of NIS 180 million, a 13% premium on its market cap. The final price will be adjusted according to future dividends distributed by Plasto Sac.
Cargal bought the 35.5% holding in Plasto Sac owned by M.Z. Hershko Investments Ltd., owned by Plasto-Sac CEO Motti Hershko, and the 36.5% owned by Emilia Development (OFG) Ltd. (TASE:EMDV), controlled by Oded Feller. Cargal is owned by CE Cardboard Industries Ltd., with a 73% stake, and Clal Industries and Investments Ltd. (TASE: CII), with 27%.
Emilia said that, in the event that negotiations with the Antitrust Authority are successful, it will report a pretax capital gain of NIS 23.5 million on the sale.
Motti Hershko, who founded Plasto Sac and managed it for a quarter century, recently decided that the time had come to cash in on his holding in his life’s work. Since he had a joint voting agreement with Feller, the two men are both selling their position, through their companies. Hershko will reportedly continue to manage Plasto Sac as an employee for a limited period following the acquisition, and assist in its integration with other Cargal subsidiaries.
Cardboard manufacturer Cargal was founded 50 years ago. CE Cardboard Industries controlling shareholder Nir Dor headed an investors group that acquired Cargal, and subsequently made an offer to purchase the public’s holdings and delisted the company from the Tel Aviv Stock Exchange (TASE).
With the acquisition of Sderot-based Plasto Sac, Cargal is acquiring three product lines: products for the rubber industry; plastic bags and films; and safety films with special seals that leave no mark when opened.
Plasto Sac posted NIS 160 million revenue in 2006, up 14% on 2005. Its operating profit margin was 14% of revenue and net profit totaled NIS 19 million. The company had a positive cash flow of NIS 17 million, and shareholders’ equity totaled NIS 118 million at the end of 2006, financing 43% of its balance sheet total.
Published by Globes [online], Israel business news - www.globes.co.il - on April 5, 2007
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