FIMI to increase Amiad Filtration Systems stake to 46%

Amiad filtration system

FIMI is in talks to invest NIS 100 million more in the kibbutz company, at 10% below the current market price.

FIMI Opportunity Funds, headed by Ishay Davidi, is taking steps to gain control of kibbutz company Amiad Filtration Systems Ltd. (AIM:AFS), which has a £58 million (NIS 253 million) market cap in London. FIMI first invested in Amiad in the summer of 2018, buying 9% of the company's shares for $5.3 million, and increased its stake in the company to 18% four months ago by investing $6 million more. FIMI is now slated to invest NIS 100 million more in Amiad, mainly in its share capital.

Amiad, located on Kibbutz Amiad in the Upper Galilee, develops, manufactures, and markets water filtration systems for the industrial and municipal sectors. The company yesterday reported that it was in negotiations for another $22 million (NIS 77 million) investment by FIMI at £2.30 per share, 10% lower than the market price. Since the negotiations were reported in August 2019, Amiad's share price has spurted 22% before yesterday.

In return for the investment, Amiad will issue new shares to FIMI constituting 25% of its share capital. FIMI is also negotiating to acquire 10% more of the company from Kibbutz Amiad, Amiad Water Systems' controlling shareholder, and from Kibbutz Beit Zera at the same share price (a total of $6 million). The kibbutz and FIMI are discussing the possibility of FIMI paying up to $9.25 million more if FIMI sells its stake in Amiad Water Systems at more than a specified price.

If and when the offering and the deal between FIMI and the kibbutzim are completed, FIMI will hold 46% of Amiad Water Systems, fully diluted, and Kibbutz Amiad will hold 33%. Kibbutz Amiad holds shares in the company through two different entities: the Collective Agricultural Association and the HaHoshlim Fund, both of which are included in the negotiations with FIMI. HaHoshlim and FIMI are also negotiating a shareholders' agreement that will give FIMI the right to appoint a majority of the board of directors, with the HaHoshlim Fund having the right to join any future sale of shares by FIMI. Amiad says that the negotiations have not yet produced an agreement, and that its completion is subject to a number of conditions, including approval by the company's shareholders, other than FIMI and the kibbutz.

FIMI first invested in Amiad Water Systems at £2.60 a share, higher than the price now being offered, when it acquired the holdings of the KBI investment fund. FIMI also increased its holdings in the company at the same price in May when it acquired the shares of irrigation company Berman Water Control Solutions, owned by Kibbutz Evron (75%) and Kibbutz Sa'ar (25%).

Higher revenue, lower profit

Together with the report about the negotiations with FIMI, Amiad Water Solutions yesterday published its financial reports for the first half of the year, showing a 3.8% growth in revenue to $58.4 million, but a 67.7% drop in net profit to $545,000 as a result of a smaller gross profit and higher expenses. Amiad said that it would have good growth in 2019, with opportunities for faster growth.

FIMI recently signed a non-binding letter of intent for a deal to acquire control of water infrastructure company Tahal from Kardan NV for $35-40 million. It was recently reported that FIMI was trying to sell irrigation company Rivulis Irrigation (formerly John Deere Water) at an estimated $500 million valuation.

Published by Globes, Israel business news - en.globes.co.il - on September 12, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Amiad filtration system
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