Mega trustees confident of acquisition bids

The Lod District Court has postponed the deadline for bids by 24 hours until Wednesday evening. Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI) is reportedly set to submit a bid although market sources believe the discount supermarket chain has little chance of succeeding.

A few hours before the the tender for acquisition of the Mega retail chain was due to be closed this evening, after a previous deadline passed without a single bid being filed, Mega trustees Advocates Ehud Gindes and Amir Bartov and Gabi Trabelsi, CPA, said that they were confident that bids would be made to acquire Mega as a single entity.

At the same time, former Minister of Agriculture Shalom Simhon and former Ministry of Agriculture director general Lior Gabai petitioned the Court to allow them access to the information room opened by the trustees, so that they can submit a joint bid to acquire Mega by 10 small retail chains. A petition was also filed on behalf of Navon Honeh, a little-known CPA, for a temporary injunction ordering the trustees to delay the sale of the chain by 75 days in order to enable the chain's employees or other parties to form a purchasing group on a franchise format and raise financing for the deal. The idea behind this petition is to buy each branch separately.

The 10 smaller retail chains seeking to acquire Mega as a bloc, which include Super Dosh and Machsenei Hashuk, plan to later divide the Mega branches between them. Due to the opposition by the trustees to Simhon's plan, he petitioned the Court through Adv. David Fohrer to order the trustees to allow the 10 chains to receive information about Mega and to open its information room.

Several weeks ago, the Antitrust Authority opposed a similar effort promoted by Victory Supermarket Chain Ltd./ (TASE: VCTR). The Authority did not oppose Simhon's idea, however, among other things because the large Yenot Bitan chain was removed from the group of small chains represented by Simhon, thereby easing concerns about damage to competition.

Through Adv. Gil Ron, Honeh admitted to the Court that his petition was an unusual one. He said that in order to increase certainty about the company's future, he was seeking permission to form a group among the Mega employees and/or others to raise money to buy the branches. His petition stated, "At the last minute, we spoke with a number of branch managers, who expressed willingness to buy the branch they worked in, and were very interested in not being dependent on the desires and policy of a single buyer."

Honeh added that splitting the chain into a large number of independent branches fulfilled demands in the market for development of competition in the food market and the empowerment of employees and small businesses. Honeh also said that the idea of his acquisition model was the independent purchase and acquisition of each branch separately by the manager, his deputy, an employee, or any other external party, and transferring its business into a new company. He said that a similar model had been implemented at other chains, such as Renuar, Bagir Group Ltd. (AIM: BAGR), and Max Brenner. He therefore asked for 75-day postponement of the tender for the purpose of completing the acquisition of all the branches.

Published by Globes [online], Israel business news - www.globes-online.com - on March 8, 2016