Flatbush Watermill LLC yesterday notified the US Securities and Exchange Commission (SEC) that it has reached a 5.3% holding in Retalix Ltd. (Nasdaq: RTLX; TASE: RTLX), after buying $16.2 million worth of shares. The shares were purchased during February at $14.23-14.64 per share.
Retalix's share price rose 4.4% on Nasdaq yesterday to $14.38, giving a market cap of $346 million, and rose 1.2% by mid-afternoon on the TASE to NIS 51.50.
New York City-based Flatbush Watermill is run by managing partner Joshua Schwartz. The company said in its statement to the SEC that the acquisition was for investment purposes and that the shares were not acquired with the intent to change or influence control of Retalix. Flatbush Watermill added, however, that it reserves the right to change its plan and intentions at any time as it deems appropriate.
Another sentence, however, sends a different and less friendly message to Retalix's board of directors, stating that Retalix "is strategically well positioned to deliver innovative products and related services primarily to the retail industry." Flatbush Watermill goes on to say that the recent change in ownership at Retalix (referring to the purchase of founders shares by First Israel Mezzanine Investors Fund (FIMI) and former Amdocs Ltd. (NYSE: DOX) executives in February 2009) will position Retalix "to take better advantage of a strong competitive position built over the previous two decades."
Flatbush Watermill adds that it further believes that, over time, it "might be able to contribute valuable ideas and insight to management that could contribute to long-term value creation." Accordingly, it may communicate with other Retalix shareholders and management about maximizing the value of the ordinary shares.
In other, more blunt, words, Flatbush Watermill does not rule out intervening in the day-to-day management of Retalix, and this could become a headache for the company's current directors.
FIMI owns 18.6% of Retalix. The Alpha Group of former Amdocs executives Boaz Dotan, Eli Gelman, Nehemia Lemelbaum, Avinoam Naor, and Mario Segal owns 23.9%. Other parties at interest in the company are Israeli institutional investors.
FIMI and the Alpha Group have already profited from their investment in Retalix, but the company seems to have stagnated in the past year, as indicated by the single-digit revenue growth in the past few quarters.
Published by Globes [online], Israel business news - www.globes-online.com - on March 16, 2011
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