Pan European Permira Funds LLC will acquire drip irrigation systems manufacturer Netafim Ltd., a year after the company was put up for sale. The signing ceremony may be held today, or within a few days at the latest, after being earlier postponed. According to the letter of intent about to be signed, Permira will acquire 61% of Netafim at a company value of $870 million, including the assumption of $160 million of Netafim's debts and the rest in cash.
The sellers are Markstone Capital Partners Group LLC with a 20% stake in Netafim, Kibbutz Magal, with a 23% stake, Kibbutz Yiftach, with 8%, and Tene Investment Funds, with 10%. Kibbutz Hatzerim owns the rest of Netafim.
In June, "Globes" reported that Permira signed a letter of intent to acquire Netafim.
The news comes the same day that IDB Holding Corp. Ltd. (TASE:IDBH) announced that it will not sell its controlling interest in Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) to Permira.
Several foreign private equity funds bid for Netafim. Apax Partners was closed to a deal, until Permira trumped it.
Netafim is one of the stars of the Kibbutz Industry Association. The company suffered a drought in sales in 2007-08, but subsequently recovered. It reportedly had more than $500 million in sales in 2010, and sales are forecast to reach $770 million this year. Its earnings before interest, taxes, depreciation and amortization (EBITDA) is projected to reach $115 million in 2011, which means that the acquisition was made at a strong future EBITDA margin of 8.5.
Netafim has 2,000 employees. It owns 13 manufacturing plants in 11 countries, including four in Israel at Magal, Yiftach, and Hatzerim. The company has 30 subsidiaries and representatives in 110 countries. Netafim's CEO is Yigal Eisenberg and its chairman is Israel Makov, the former CEO of Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA). Makov will reportedly receive a fat bonus of several million dollars on the sale.
Published by Globes [online], Israel business news - www.globes-online.com - on September 21, 2011
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