Egged seeks strategic investor

Egged

The bus cooperative, which is changing its business structure, is looking for a strategic investor to buy a 50% stake.

Egged Israel Transport Cooperative Society Ltd. has hired financial consultancy company Deloitte Israel to prepare a company valuation for a possible sale of up to a 505 stake to a strategic investor, sources inform "Globes." The sales process could get underway next year.

Last month, the government agreed with Egged to change the long-established cooperative into a regular business company and to bring in a strategic partner with significant shares in the bus company. Egged would undergo a similar process to its old rival the Dan bus company, which formerly a cooperative has today become a profitable company.

The government took advantage of the signing of a new subsidy agreement in order to insist on moving ahead with structural change from a cooperative, if it wanted to receive some NIS 1 billion in subsidies over the next ten years. Egged also agreed to open up the lines it operates to competition, which by 2030 would end the monopoly that it has on many lines. Egged also agreed that 3,100 of its veteran employees would take early retirement and that it would sell part of its subsidiary Egged-Taavura.

Egged is currently controlled by its veteran members and is considered inefficient and wasteful in its financial management.

Egged has a 35% share of Israel's bus market and a monopoly in Jerusalem and environs and many outlying regions.

Even so Egged won the tender for the Red Line of the Tel Aviv light rail and the company hopes to expand its presence in the light rail sector.

Published by Globes [online], Israel business news - www.globes-online.com - on July 4, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018