FIMI Opportunity Funds chairman Ishay Davidi has his sights trained on his next takeover target: Hadera Paper Ltd. (TASE: AIP; Pink Sheets: HAIPF), whose market cap is NIS 413 million. Sources inform "Globes" that Davidi has already begun talks with Clal Industries and Investments, controlled by Len Blavatnik, which owns 59% of Hadera Paper's shares, with a value of NIS 244 million. The price being discussed in the negotiations is at a large premium over the market price. No response from FIMI or Clal Industries to the report was available.
Hadera Paper manufactures and sells packing paper, cardboard, writing and printing paper, and collects and processes paper and plastic waste. Its share has lost 65% of its value over the past two years, after the company found it difficult to cope with the fall in global paper prices, while being saddled with a heavy NIS 1.1 billion debt taken to pay for new investments in production machinery. The company finished 2012 with a miniscule NIS 4 million net profit, and accumulated losses totaling NIS 229 million in the two subsequent years.
FIMI, Israel's largest private equity fund, specializes in acquiring control of industrial companies, and in enhancing their value. The fund recently completed the acquisition of control over the business of raw material manufacturer Polyram from Moshav Ram-On, and earlier this year acquired control of Rekah Pharmaceutical Industry Ltd. (TASE: REKA). Under Davidi's leadership, the fund is searching for investments in companies with potential for a business breakthrough, or which have encountered a crisis, and are in need of a capital injection in order to restructure and improve their activity.
Following the difficulties experienced by Hadera Paper, the company board of directors and management have already begun to take steps to improve the situation. The company's first measure was to sell its 49.9% stake in diaper manufacturer Hogla-Kimberly to Kimberly-Clark, which already owned 50.1% of the company, for NIS 648 million. Following the sale, Hadera Paper reported an exceptional NIS 271 million net profit in the first quarter and a NIS 310 million increase in equity to NIS 896 million.
In addition, the company has signed two agreements this year (as yet uncompleted) for the sale of other assets not part of its core activity. One includes the sale of the power station built by Hadera Paper in the plant adjacent to IC Power, controlled by Idan Ofer, for NIS 60 million. The second deal is the sale of its Grafitti subsidiary, which markets office equipment, to the Kravitz chain for NIS 48 million.
Hadera Paper currently has 1,800 employees.