The Renuar fashion group is one its way to Apax Partners, led by Zehavit Cohen. Sources inform "Globes" that the negotiations between the parties have reached the home stretch, and the final stages of formulating a draft contract, in which Apax will acquire 50% of Renuar at a company value of NIS 360 million, are underway. Signing of the contract is expected in the coming days.
"Globes" revealed that the parties were negotiating in an exclusive report in February, but the negotiations did not progress at the time, due to a thorny dispute on the calculation of the price for the deal, derived from the profit multiple. Renuar argued that the investment budget received by the group from the shopping malls should be regarded as an integral part of its profit, and the price for the deal should therefore be higher. Apax refused at first, but then agreed, and sources inform "Globes" that the price for the deal will be calculated at a value NIS 50 million higher than the value initially discussed, meaning that Apax will pay NIS 25 million more for its 50% stake.
Yossi Brosh and Eli Berkovice control Renuar, the fifth largest fashion group in Israel, with a 90% stake, and the rest is owned by Renuar CEO Serge De'eri.
Renuar began as a small fashion company, and later opened a chain of 125 stores for the Renuar brand. The brand originally appealed only to women, but the group later opened men's stores. The brand is aimed at the 16-45 age bracket, but Renuar is aiming at the status of a young audience brand. The group launched a chain of 43 fashion shops for women aged 15-25 under the Twentyfourseven brand. The company launched a sales website for the Renuar brand in 2014, and six months later, in the first quarter of 2015, also launched a website for Twentyfourseven.
The group is a private company whose owners stay out of the limelight, and it financial results are unknown. According to market estimates, the group's annual sales total NIS 500 million.
The group previously considered a Tel Aviv Stock Exchange (TASE) IPO and according to reports, announced EBITDA of NIS 30 million. It was also estimated that the group's business generated an annual net profit of NIS 25 million. It can be assumed that the group's gross profit margin resembles that of other fashion companies - in the neighborhood of 60%. This is not the first time that Renuar has negotiated for the entry of a partner. A few years ago, it negotiated for a merger with Fox-Wizel Ltd. (TASE: FOX), and held talks with potential investors last year.
Apax, which successfully wound up its investment in Tnuva last year, when it completed the sale of the company to Chinese company Bright Food at a company value of NIS 8.6 billion, is looking for investments. Last year, the fund also considered many investments in the retail sector, and before that considered a partnership in the Fox fashion chain. In April 2015, Apax acquired an 80% controlling interest in Schulz Catering. It is believed that the deal reflected a NIS 60-70 million value for the company. Founded in 1979, Schulz operates dining rooms for employees in their workplace. It is one of Israel's 10 largest catering companies, with a NIS 1.5 billion annual turnover.
Three years ago, the company won an IDF tender to supply meals to IDF bases for 22 years. Cohen's policy is to acquire companies whose business and profits can be improved. For example, the Tnuva group improved its business by raising prices, as part of Apax's desire to make quick profits after completing its acquisition of the group. Apax declined to respond to the report. No response from the Renuar group had been obtained as of web posting.
Published by Globes [online], Israel business news - www.globes-online.com - on June 5, 2016
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