Israel’s logistics sector is one of the main beneficiaries from resumption in economic growth in recent years. The rise in commercial activity has expanded the business of the country’s logistics companies.
This growth has not gone unnoticed by the international delivery companies, such as International GmbH (XETRA:DHL), FedEx Corporation (NYSE:FDX), and United Parcel Service Inc. (NYSE:UPS), which have been gradually expanding their activity in the Israeli market. Israel’s geographical position as a bridge between the Far East and Europe and the US has also not gone unnoticed.
Israel’s international delivery business has an annual turnover of $250 million. Last year, several deals gave an indication of the market’s potential. For example, First Israel Mezzanine Investors Fund (FIMI), run by general manager Ishay Davidi, acquired 40% of Orian SM Ltd. (TASE:ORIN) for $10 million (reflecting a company value of $25 million). FIMI took Orian public a few months later at a company value of $60 million.
Movilei Dror & Co., owned by CEO Avshalom Nuriel, acquired control of Fritz Companies Israel T. Ltd., and plans to float it soon. UPS owns 26% of Fritz Companies.
Flying Cargo Ltd. is the leader in Israel’s logistics market, followed by Orian, Fritz Companies, and UTi Worldwide Inc. (Nasdaq:UTIW) subsidiary UTi Israel Ltd.
The main beneficiaries of DHL’s acquisition of the international delivery business of Flying Cargo will be its owners, managing directors Daniel and Avraham Reik. They are not well known to the general public, but highly appreciated in the logistics and international delivery industry. The built up the company from nothing since they founded it in the early 1980s, and the sale is an impressive exit, especially since they sold only a part of the company’s business.
The deal again demonstrates that high-tech is not the only sector were good business can be done. The dull industries, such as logistics and international delivery, is also available.
Published by Globes [online], Israel business news - www.globes.co.il - on October 16, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007