13 years after Kibbutz Revivim split its two auto parts manufacturers, Raval Ltd. (TASE: RVL) and Raviv ACS Ltd. are remerging. In a notice to the TASE today, Raval said that it was considering a merger with Raviv in share-swap deal, following which Raval's shareholders would own 65% of the merged company. The precise share allocation will be determined by the valuation of the two companies by an independent assessor.

Raviv, founded in 1971, makes components for the motor vehicles industry, including washer systems and brake fluid and fuel valves, as well as plastic parts for seats, doors, and the dashboard. In 2009, Raviv acquired the business of Arkal from Kibbutz Ben Zera. The company also has facilities in the US, Canada, Russia, and China.

Raviv founded Raval in 1994 as a subsidiary to manufacture fuel tank venting systems and related parts. Four years later, following its first order by Volkswagen AG (DAX: VOW) for its Polo cars, Raviv decided to spin off Raval into an independent company in order to establish its own reputation.

Kibbutz Revivim owns 49.1% of Raval and 63% of Raviv and First Israel Mezzanine Investors Fund (FIMI) owns 21.2% of Raval and 18.8% of Raviv. Revivim and FIMI decided to remerge the two companies to create a larger company that will result in savings and improvement in operations, economies of scale, and a sounder financial footing.

Raval today disclosed the financial results of Raviv. Raviv posted a net profit of €3.3 million on €53.4 million in sales in January-September, down from a net profit of €4.8 million on €58.2 million in sales in the corresponding period of 2010. Raval posted a net profit of €1 million on €35.2 million in sales in January-February. The combined turnover of the two companies was €115 million.

After the merger, Kibbutz Revivim will own 58.2% of the combined company, and FIMI will own 20.3%. In October 2009, FIMI acquired its stake in Raval from Shamrock Israel Growth Fund, which had invested in the company in 2004. In July 2010, FIMI gave Raviv a $10 million mezzanine loan, which included an option to convert the loan into equity.

Raval's share price rose 3.9% today to NIS 3.53, giving a market cap of NIS 95 million.

Published by Globes [online], Israel business news - www.globes-online.com - on December 27, 2011

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