Israeli fashion company Castro Model Ltd. (TASE: CAST), headed by Gabriel (Gabi) Rotter, announced today that it is buying Yossi Gabison's Hoodies group outright in a share swap transaction. Up to now, Castro was the second-largest publicly traded fashion company in Israel.
The Castro-Rotter family's holding in the merged company will be diluted from 70% to 45%, while the holding of the partners in the Hoodies group will rise from 5% to 38%, and the public's holding will fall from 25% to 17%. The deal is estimated to be worth NIS 300 million. For the time being there is no change in the senior management in the companies. Gabison has decided not to appoint directors in the Castro group, although he could do so at a later stage.
According to financial calculations by the two sides due to be released on Thursday, the merged group is worth NIS 1-1.3 billion. Its aggregate turnover in 2017 was NIS 1.8 billion, and aggregate EBITDA was NIS 175 million.
The main shareholders in Hoodies, and in the merged group, are Gabison and Eli Gabi. There are also two other groups of investors. The first consists of Oren Bar-Gil, Nitzan Israeli, Amit Shuk, and Mariano Karp, and Yuval Shani, each of whom owns 2-3%. In the second group, with about 1% each, are Hoodies group CFO Yair Ohayon, Mordi Shabat (formerly CEO of real estate group Gindi), and model Bar Refaeli, who also fronts the group's eyeglasses brand Carolina Lemke.
Two years ago, Castro bought 26% of Hoodies, Top Ten, Carolina Lemke and Accessorize, and 50% of the Urbanica chain. In that deal, Castro was given an option until October 2018 to raise its stake in the Hoodies group to 50%, but it has now announced that it is buying 100%.
The Castro group said in its announcement today that the outright purchase of Hoodies was "part of the company's strategy of expanding its activity in Israel through investment in complementary fashion and lifestyle brands," and that the Hoodies group, consisting of five brands, would be "a profitable and substantial growth engine for the company in Israel and overseas."
Published by Globes [online], Israel business news - www.globes-online.com - on June 25, 2018
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