A group of investors headed by textile manufacturer Motti Baron is interested in acquiring the controlling interest in Kitan Consolidated Ltd. from IDB Holding Corp. (TASE:IDBH) subsidiary Clal Industries and Investments (TASE:CII). Baron is the controlling shareholder in private textile company Royal Night and was a former CEO of Kitan. A group of Swiss and British investors is also interested in Kitan.
Dan Tahori Investment Bank, headed by Dan Tahori, is handing the sale. Tahori assisted IDB Holding chairman Nochi Dankner acquire the company.
Kitan had $56 million in sales in 2003, and predicts 10% growth this year, thanks to moving its Argaman Industries (TASE:ARGM) plant from Yavne to the Kitan plant in Dimona, and increased exports.
Sources close to the negotiations said Clal Industries executive VP Azri Gonen, who is responsible for the company's textiles business and also a former president of Kitan, is also organizing a consortium to bid for Kitan. Since ownership of IDB changed hands, Gonen has held a 50% position and his contract expires at the end of 2004.
A Clal Industries spokesman said, "Gonen is not a partner in the acquisition process." He added, "The company will not discuss the matter until Tahori classifies the bids for Kitan."
Textile industry sources believe that if Kitan is sold to a foreign consortium, the chances of the company closing will be greater, because the acquisition would be aimed at obtaining Kitan's strong brands: Kitan, Royal Sateen, Espirit and others. In addition, the cost of manufacturing in Israel makes it worthwhile to transfer production to China or Eastern Europe.
IDB executives want to sell the company's textile manufacturing businesses and focus on marketing and fashion chains, because of Israel's high manufacturing costs.
Baron said, "I confirm that I'm holding advanced negotiations to acquire Kitan. If the group I head closes a deal, I have no intention of closing the factory in Israel. I'll continue manufacturing in Israel, just as we're manufacturing today."
Tahori declined to comment.
Published by Globes [online] - www.globes.co.il - on June 1, 2004