FIMI in advanced talks to buy kibbutz co Galam

Ishay Davidi

FIMI will pay NIS 300 for the company, which produces raw materials for the food industry.

Investment fund FIMI Opportunity Funds, headed by Ishay Davidi, is conducting advanced negotiations for the acquisition of full ownership in Galam from Kibbutz Maanit and the Bereshit fund. Estimates are that FIMI will pay NIS 300 million for the company. The kibbutz, currently in the midst of being privatized, owns 70% of Galam, and Bereshit, which invested in Galam in 2010, owns 30%. The acquisition will not include Galam's holding in Enzymotec Ltd. (Nasdaq: ENZY), currently worth $40.2 million.

Galam is active in the raw materials sector, mainly for the food industry. The veteran company (founded in the 1940s) manufactures fructose-based candy, starch for both the food and other industries, such as the paper industry (Hadera Paper Ltd. (TASE: AIP; Pink Sheets: HAIPF), another FIMI company, is a Galam customer). Galam also is active in foreign trade, importing and marketing additional food ingredients for the food industry. 55% of its sales are in Israel, and the rest are from exports. The company has 270 employees, mainly in Israel, and its production sites are located near the kibbutz and in Spain and Germany. Galam is managed by CEO Liad Cohen, a former CEO at Tnuva Food Industries Ltd., who joined Galam in 2015. The company's annual sales total NIS 450 million and it makes a profit, with earnings before interest, taxes, depreciation, and amortization of 10%.

Galam is regarded as stable, but has not grown in recent years. FIMI will attempt to improve the company and develop its growth engines. For example, one possible growth engine is to ride the current consumer trends in the global food market by offering healthier solutions. Galam was recently involved in one of the largest recalls in the Israeli food industry, in which 20 food producers called back their products due to concern about peanut traces in products that did not bear warnings. These companies used garlic powder in their manufacturing process, which was suspected of containing peanut allergen traces; the manufacturer of the powder was Degel, a Galam group company. It is believed that the recall did not affect the acquisition negotiations.

FIMI's holdings include Ham-Let (Israel-Canada) Ltd. (TASE: HAML), Magal Security Systems Ltd. (Nasdaq: MAGS), Rivulis Irrigation, and others. FIMI's sixth fund, which got underway early this year, is slated to invest $250 million a year in four-five Israeli companies, and recently reported its first investment - in Beit Shemesh Engines.

Published by Globes [online], Israel business news - www.globes-online.com - on July 19, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Ishay Davidi
Ishay Davidi
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