Arcadi Gaydamak has bought 51% of Tiv Taam Holdings Ltd. (TASE:TTAM) for $100 million, an 83% premium over market cap of NIS 448 million.
Following the “Globes” report on the sale, Tiv Taam and its controlling shareholder, Enter Holdings Ltd. (TASE:ENHD), notified the Tel Aviv Stock Exchange (TASE) about the sale. Gaydamak bought 25.5% of Tiv Taam at NIS 8.02 per share, and 3.2 million series 3 warrants. He will deposit $20 million with Enter Holdings on June 15. Tiv Taam CEO Yaakov (Kobi) Trebitsch also sold a 25.5% stake at the same price.
Gaydamak spokesman Yossi Milstein confirmed to “Globes” that Gaydamak planned to make Tiv Taam kosher, and close the chain on Saturday.
Enter Holdings, controlled by chairman Amit Berger, acquired half of Tiv Taam a year ago through World Group Holdings for $32 million, and then took Tiv Taam public using World Group’s TASE listing. Berger has now sold 25.5% of the company for $50 million, and will own a 13% stake with a market value of $14.5 million. However, if Tiv Taam’s share reacts in the same way as the shares of other recent acquisitions by Gaydamak, Berger’s share could reach a value of $25 million.
Tiv Taam posted a gross profit of NIS 65.4 million on NIS 235.4 million in sales for the first quarter of 2007.
The acquisition of Tiv Taam is Gaydamak’s fourth recent acquisition, following Ocif Investments and Development Ltd. (TASE: OCIF), Gilon Investments (1979) Ltd. (TASE:GILN), and Ameris Holdings Ltd. (TASE:AMRS.B1), the controlling shareholder of Israel Petrochemical Enterprises Ltd. (TASE:PTCH).
Gaydamak recently announced that he plans to run for mayor of Jerusalem. This leads to the conclusion that he will make Tiv Taam kosher immediately upon taking control of the supermarket chain. When Bronfman Fisher Investments Ltd. considered acquiring the company, it examined such a measure, but decided that it was not worthwhile.
If Tiv Taam goes kosher, this will have two major consequences. First, it will lose its distinctiveness as a chain that currently sells non-kosher meat, is open on Saturday, and sells bread during Passover. Second, Gaydamak, who has been making a name for himself as a philanthropist, could use the company as a platform to reach potential voters, by slashing prices to become a serious competitor to Blue Square Israel Ltd. (NYSE: BSI; TASE: BSI) and Super-Sol Ltd. (TASE:SAE;Pink Sheets:SSLTF.PK), which controls 38% of the retail market.
A senior retailer told “Globes”, “Reaching voters via food is the strongest tie there is. Through the supermarkets, Gaydamak can serve people, distribute free food, and decide that he won’t make a profit.
Gaydamak paid premiums of 50-80% on the public companies he has acquired, and the shares generally have promptly made up the difference. Some people have even been talking about a “Gaydamak premium”, and there have been plenty of rumors about his next purchase.
However, Gaydamak will now have to justify the credit that the capital market has given him. He has said that he plans to leverage his acquired public companies with his private companies, which mostly do business in Russia and Africa. His acquisitions have now given him interests in real estate and development, finance and energy, which he is expected to develop. If he delivers the goods, the companies’ values will continue to climb; if he does not, their value will plummet.
Published by Globes [online], Israel business news - www.globes.co.il - on June 10, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007