After the market closed today, Shufersal Ltd. (TASE:SAE) announced that the sale of the controlling interest in the company to Bronfman Fisher Investments Ltd. and Leo Noe has been cancelled.
Sources inform ''Globes'' that Bronfman Fisher Investments Ltd. and Leo Noe were demanding that Nochi Dankner lower his asking price for the controlling interest in Shufersal, Israel's largest supermarket chain. The parties also disagreed over who will pay the bonus that Shufersal's employees are demanding for the sale.
Dankner controls Shufersal through IDB Holding Corp. Ltd. (TASE:IDBH) unit Discount Investment Corporation (TASE: DISI). He wanted the buyers to pay the bonus to Shufersal's 12,500 employees; the buyers wanted Dankner to pay it.
On Thursday, Shufersal and Bronfman Fisher subsidiary Isralom Investment Ltd. notified the TASE that they had extended the deadline for closing the deal until November 24. A source close to the deal told "Globes" today that closing the deal hinged on the price. "The price is expensive, and the buyers want a discount. There is an argument in principle over the employees' bonus. It isn't about the money; it's about the principle. The bonus could exceed NIS 30 million. Why should they pay it? The buyers aren’t budging and neither is Nochi."
Under the letter of intent, Discount Investment was due to sell its 46% stake in Shufersal to Isralom and Noe for NIS 2.4 billion: NIS 24.20 per share, giving a 47% premium on the share price at the time. Noe's share of the deal was NIS 1.7 billion. Isralom, which already owns 18.6% of Shufersal, would have increased its stake to 32.3%, the same size as Noe's stake. Discount Investment was to receive NIS 650 million when the deal was closed and the remaining NIS 1.8 billion over five years, with an option to extend the payments by a further year.
Shortly after the deal was first announced, Shufersal workers committee chairwoman Ariella Siso demanded negotiations to safeguard the employees interests under their collective agreement and a sale bonus. The Histadrut (General Federation of Labor in Israel) also announced a labor dispute at the company.
The source said that there was no other buyer for Shufersal. "No one will buy it. If not now, the deal will reappear in three months. The buyers are sitting on the fence waiting for Nochi." He also denied rumors of disagreements between Noe and Matthew Bronfman and Shalom Fisher. "It's all nonsense. Bronfman Fisher and Noe are in complete agreement," he said.
This was the third time that Bronfman and Fisher have tried to buy out Dankner in Shufersal.
Shufersal's share price fell 2.5% today to NIS 15.50, giving a market cap of NIS 3.4 billion. Discount Investment's share price fell 3.1% to NIS 30.50, giving a market cap of NIS 2.6 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on November 21, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011