The cash machine that food group Neto ME Holdings (TASE: NTO) has become for its controlling shareholder and chairperson David Ezra continues to work at full steam. With a further deal for the sale of part of his stake in the company, Ezra has amassed more than NIS 700 million in under three years, through sales of shares and huge dividends distributed by Neto during the period, and yet he still remains in control of the company.
Last week, Neto reported the completion of a further deal in the plan for Ezra to sell up to half his holding in Neto. The buyer in the current deal (and in the previous deal) is David Matzasa, a prominent player in Israel's poultry market, who markets through Neto subsidiary Neto Malinda.
Matzasa's stake in the company controlled by Ezra now amounts to 10%, through a share purchase at more than twice the market price. Altogether, Matzasa has invested NIS 120 million in buying Neto shares from Ezra, in three purchases over the past few months.
Under his agreement with Ezra, reported in June this year, Matzasa can continue to increase his stake in Neto ME Holdings up to 23% (and thereby make his stake almost equal to that of Ezra) through an additional investment of NIS 150 million. If that happens, David Ezra's bank account will have swollen by some NIS 900 million in three years from dividends and sales of shares.
Commenting on the high prices that Matzasa has paid for the Neto shares he has bought, and that he will again pay if he chooses to increase his stake, a market source said, "It's hard to come up with an explanation for these deals. There is no economic reason to do them at such prices, at least not according to the information presented by the company."
Neverthless, it should be recalled that David Matzasa is no stranger to David Ezra and the Neto group. Two years ago, Neto Malinda reported an agreement for marketing and distributing kosher poultry "in accordance with its orders, with no commitment to supply the full quantity ordered, in exchange for a marketing commission," and with annual sales estimated at the time the agreement was signed at NIS 800 million.
The name of the customer was not disclosed, but as far as is known it is the Yiska abattoir owned by Matzasa.
Neto ME Holdings' share price has risen by 60% over the past two years, giving it market cap of NIS 600 million. This makes David Ezra remaining 38% stake in the company worth NIS 230 million at the market price.
Published by Globes, Israel business news - en.globes.co.il - on September 13, 2021
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