Azrieli Group Ltd. (TASE: AZRG) is entering the e-commerce field by acquiring the business of the Buy2 Networks Ltd. (TASE:BUY2) e-commerce website for NIS 62 million, The group will also pay NIS 5 million a year for management services from Buy2 Networks for two years. The acquisition price was NIS 70 million, but NIS 8 million was deducted for adjustments.
According to Azrieli, it is acquiring Buy2 Networks subsidiary Netex New Media as part of its strategy aimed at building a new digital growth engine in Israel. Buy2 Networks founder Aviv Refuah will continue as CEO of Netex New Media.
When the acquisition is completed, Buy2 Networks is expected to post a pre-tax capital gain of NIS 52 million. Azrieli Group believes that if and when the deal is completed, it will have no substantial impact on the group's collection of assets and its profits.
Buy2 Networks has undertaken to refrain from competing with Azrieli Group and/or the acquired subsidiary for four years from the date on which the acquisition is completed. Completion of the deal is contingent on various conditions, including approval of the deal by the Antitrust Authority director general, and there is no guarantee that it will be completed.
Buy2 Networks has 60 employees, and operates a broad range of e-commerce websites and services, such as home and garden products, electrical and consumer electronics products, fashion and cosmetics, pharmaceutical products, products for parents and children, sports and camping, etc. The company's e-commerce platform contains over 20,000 different items available for online purchase.
The company also provides solutions for suppliers and sellers wishing to sell on the group's websites, including marketing products to surfers, clearance services and customer service, and logistics services, including product storage and management of distribution to the customer's home within a short time.
Azrieli Group head of new commerce Timor Gordon said, "E-commerce is a new growth engine for Azrieli Group. Buy2 Networks' subsidiary is a company with innovative technology, excellent business, and talented employees. We regard it as a reliable basis for Azrieli Group's e-commerce business."
Refuah said, "We are delighted with Azrieli Group's selection of Netex New Media as the growth engine for its e-commerce activity. This is a vote of confidence in our technology, platform, and human capital. E-commerce is developing rapidly in Israel and worldwide, and there is huge potential in this sector. We believe that combining forces with Azrieli Group will enhance our activity in all channels and create a buyer and service experience that is unique in the Israeli market."
Published by Globes [online], Israel business news - www.globes-online.com - on May 3, 2016
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