Rami Shavit is disappointed. After waiting for six months, Hamashbir 365 Holdings Ltd. (TASE:MSAH), which he controls, announced on Friday that the planned NIS 134 million investment in the department store by Nashone Inc. has been cancelled. Hamashbir attributes the cancellation to delays by the investors, and says that it will not affect the company's operations or projected cash flow.
"The US company acted at an unsatisfactory pace to complete the steps needed to close the deal. After they asked for another postponement of the completion date, we saw fit to announce that we would not agree," said Hamashbir CEO Rami Shavit. "In the past few months, we've received several inquiries from investors interested in investing in the company, but we did not pursue them because of our prior commitment to Nashone. We believe that this is the right thing for us, and we hope to close an alternative deal later this year."
In August 2013, Hamashbir signed a binding letter of intent with Nashone, owned by Scott Korman and Ari Korman, which promised to inject NIS 77 million into Hamashbir Department Stores and NIS 57 million into its parent company, Hamashbir 365, through which Shavit holds the companies.
In exchange for the capital injection, Hamashbir promised Nashone 29% of Hamashbir Department Stores, with an option to increase the stake to 34%. The deal was based on a business plan that included development of Hamashbir Department Stores and the establishment of new activity.
Under the agreement with Nashone, Hamashbir undertook to increase its stake in New Pharm Drugstores Ltd. to acquire full ownership of the company. Earlier this year, Hamashbir announced that it had reached an agreement on a deal that valued New Pharm at NIS 100 million.
In addition to Hamashbir Department Stores and New Pharm, Hamashbir 365 offers holiday packages through Aviation Links Ltd. (TASE: AVIA), and it launched a supermarket chain, Cost 365, a few months ago.
Investor enthusiasm for the deal boosted Hamashbir's share price 170%, giving it a market cap of over NIS 500 million. As the company's share price rose, the yield on its bond and the bond of subsidiary Club 365 Ltd. fell. In February, Club 365 bondholders approved a merger, proposed by Shavit, of the company with its parent company, Hamashbir 365 Holdings Ltd. The bondholders approved the deal, after receiving several guarantees, following lengthy negotiations.
Early this year, Hamashbir announced that the closing of the deal with Nashone would be postponed by ten weeks, but investors were unperturbed, and the share price continued to climb.
Last week, Hamashbir announced that it had teamed up with a Japanese company to establish an enterprise catering business in Japan. The deal came after Hamashbir sold Cibus Business Meals Ltd. to France's Sodexo Pass International SAS.
Published by Globes [online], Israel business news - www.globes-online.com - on March 17, 2014
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