Sources inform "Globes" that Clal Insurance Enterprises Holdings Ltd. (TASE:CLIS), Israel Phoenix Assurance (TASE:PHOE1;PHOE5) and Delek Automotive Systems (TASE:DLEA) are expected to close a deal this evening, selling Shagrir Towing Services Ltd. to DBSI Investments Ltd., owned by Barak Dotan and Joseph (Yossi) Ben-Shalom.
Clal Insurance, Israel Phoenix and Delek Automotive - which own Shagrir in equal parts - will record an aggregate profit of over NIS 100 million upon the deal close.
Shagrir is Israel's largest roadside services company, with a customer base of 750,000. The company ended 2003 with a NIS 20 million net profit, and estimated annual revenue of NIS 120 million.
Last year, Shagrir distributed a NIS 30 million dividend. If the company's rate of profitability keeps up, Dotan and Ben-Shalom could post a 15% yield on their investment.
Shagrir has a workforce of 285 that provides roadside repair and towing services to its subscribers. In the first quarter of 2004, the company experienced a drop in service calls, to 86,000 towing jobs from 94,000 in the corresponding quarter, and 365,000 for all of 2003.
The agreement includes commitments by Clal Insurance and the Israel Phoenix, to hire Shagrir's services on behalf of their customers for several years. Capital market insiders believe that the main reason for the sale is a desire on the part of Nochi Dankner (Clal Insurance's controlling shareholder), and the Israel Kass-Jacob Shachar group (Israel Phoenix's controlling shareholder), to turn a profit which can be converted into a dividend, and in doing so, reduce their level of bank debt.
Dotan is the son of former Amdocs chairman Boaz Dotan. Ben-Shalom was VP finance at Koor Industries (NYSE:KOR; TASE:KOR). If the Shagrir sale goes through, it will be the biggest deal for DBSI to date.
Published by Globes [online] - www.globes.co.il - on Tuesday, June 22, 2004