Nexus Telocation Systems (OTCBB:NXUS), a subsidiary of DBSI Investments, run by Barak Dotan and Nexus chairman Joseph Ben Shalom, is continuing to expand. A month after DBSI announced its acquisition of Shagrir Towing Services from Clal Insurance Enterprises Holdings Ltd. (TASE:CLIS), Israel Phoenix Assurance (TASE:PHOE1;PHOE5), and Delek Automotive Systems (TASE:DLEA) for NIS 200 million, it announced yesterday that the actual buyer of Shagrir will be Nexus, a developer of wireless location-based services (LBS), used to locate stolen vehicles.
Nexus completed the acquisition of Pointer (Eden Telecom Group), a provider of vehicle location and protections systems, last month. The acquisition of Shagrir boosts Nexus into the premier league. Shagrir Towing Services, Israel's leading towing company, with 750,000 subscribers, posted a profit of NIS 20 million on NIS 120 million revenue in 2003. The acquisition will make Nexus Israel's largest vehicle services company, with over NIS 180 million in business a year.
Nexus will issue $12-15 million worth of shares and convertible bonds to institutional investors and a strategic investor, take a NIS 50 million loan from Shagrir's sellers, and a bank loan to pay for the acquisition.
The advantage in acquiring Shagrir through Nexus, in addition to creating a large vehicle services company, will be a probable saving on taxes on Shagrir's future profits, since Nexus has heavy losses. Shagrir currently pays NIS 10 million in taxes on NIS 20 million annual profit. DBSI apparently wants reduce this tax payment by combining Shagrir's profits with Nexus's losses.
Ben Shalom yesterday said that the acquisition of Shagrir would create a leading vehicle services group that would include Nexus's vehicle location technology and operations, Pointer's vehicle location services in Israel, and Shagrir's vehicle services. He said the group would develop services in all these areas in Israel and expand its overseas business.
Published by Globes [online] - www.globes.co.il - on July 28, 2004