Packer Plada (TASE:PKER) is negotiating to merge its Packer Steels and Metals subsidiary with Yadpaz Steel Services (TASE:YADP). The two companies signed a non-binding letter of intent yesterday stating that Yadpaz will allocate shares to Packer Plada for Packer Steels and Metals. 60-70% of Yadpaz’s equity will reportedly be transferred to Packer Plada. Both companies produce, process and galvanize steel and metal products.
Packer, controlled by the Packer family and Africa-Israel Investments, reported to the Tel Aviv Stock Exchange that annual sales of Packer Steels and Metals are $80 million (out of Packer Plada’s total sales of $130 million a year), compared with Yadpaz’s sales of $35 million. The merger will make Yadpaz, controlled by David Cohen, Israel’s largest steel manufacturer.
Packer Steels and Metals’ equity is NIS 64.3 million, out of Packer Plada’s total equity of NIS 218 million. Yadpaz’s equity is NIS 42.8 million. The agreement stipulates that the allocation of Yadpaz’s shares to Packer Plada will be at a ratio based on the value of each company on June 30, 2002.
Cohen said, “The point of the merger is to fight steel imports. The merger of the two companies, which operate in the same field wasting manpower and resources, will provide an effective answer to the imports.” He said each company has almost 250 employees, and the merger will save 7% in manpower at each company. Cohen’s comments imply that redundant plants will be closed.
Yehoshua Cohen gave his brother David Cohen his 36% stake in Yadpaz last Friday without payment. The market of the stake is NIS 12 million, but David Cohen said he paid nothing for them. “I was given the shares as a gift, as part of our 45-year relationship in the company,” he said.
Published by Globes [online] - www.globes.co.il - on November 11, 2002