A few days after ceasing to be parties at interest in the Shufersal Ltd. (TASE:SAE) supermarket chain, Matthew Bronfman and Shalom Fisher are now selling most of their remaining holdings in it. Shufersal controlling shareholder Discount Investment Corporation (TASE: DISI) has decided to partially exercise its option to buy up to 4% more of the company from them.
Discount Investment, a subsidiary of Eduardo Elsztain-controlled IDB Development Corporation Ltd. (TASE:IDBD), reported today that it had acquired 2.5% of Shufersal, 5.3 million shares, from Bronfman and Fisher for NIS 75 million, reflecting a NIS 14.10 share price for the supermarket chain. This is 2% lower than the share price at the start of today's trading, reflecting a NIS 3 billion market cap for Shufersal, following a 25% rise in the share price this year.
Discount investment announced that following its purchase, its stake in Shufersal was rising from 58% to 61%, and it expected to post a drop of NIS 45 million in the equity attributed to the company owners. Last September, Discount Investment acquired 4% of Shufersal (9.1 million shares) from Bronfman and Fisher for NIS 135 million at a share price of NIS 14.60, 3% higher than the current market price. As a result of this sale, Bronfman and Fisher were no longer partners in the Shufersal controlling interest, whose shares they hold through Isralom Properties.
Under the agreement signed by the parties, Bronfman and Fisher granted Discount Investment an option to buy up to 4% more of Shufersal's capital. This option was due to expire yesterday, and Discount Investment took its final chance to exercise it.
The latest deal leaves Bronfman and Fisher with 2% of Shufersal, worth NIS 60 million. Last week, they sold 2% of Shufersal's shares for NIS 63 million in an off-floor deal, leaving them with a 4% holding. They thereby ceased to be parties at interest in the supermarket chain. Last week's sale was at prices similar to the current deal with Discount Investment.
Bronfman and Fisher have reduced their exposure to Shufersal in recent months by selling a large proportion of their holdings for an aggregate NIS 450 million. They first invested in the chain in March 2007 with the aim of becoming its controlling shareholders. They bought 20% of Shufersal's shares from Discount Investment for $214 million (NIS 900 million at the then-prevailing rate of exchange) in a deal reflecting a NIS 4.55 billion value for Shufersal, 50% higher than its current market cap.
In the nearly 10 years of their investment in Shufersal, it appears to be rather disappointing for Bronfman and Fisher, with a negligible return. The supermarket chain has been through a number of upheavals during this time, including the global economic crisis, which affected the local market; social protest, which had a negative impact on the supermarket chains; and a change in the controlling interest following the collapse of the IDB Group, headed by Nochi Dankner.
In the first nine months of the year, Shufersal's revenue was up 4.5% to NIS 9 billion and its profit soared 118%. Major factors in the chain's gains included a drop in competition, following the collapse of the Mega supermarket chain, its rival, and the effect of Shufersal's streamlining plan.
Published by Globes [online], Israel business news - www.globes-online.com - on December 13, 2016
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