Neto sells Bikurei Hasade Darom stake to Sheva brothers

Dudi Ezra / Photo: Aviv Hofi

Food company Neto, controlled by Dudi Ezra, will post a pretax gain of NIS 160 million on its stake in the fresh produce wholesaler.

The pressure brought to bear by Dudi Ezra on his partners in fresh produce wholesaler Bikurei Hasade Darom Agricultural Products Marketing (2002), brothers Ilan and Sasi Sheva, has led within a short time to the right result as far as he is concerned. Less than two weeks after the dispute between Ezra, controlling shareholder in food giant Neto ME Holdings Ltd. (TASE;NTO), and the Sheva brothers over their partnership in Bikurei Hasade Darom became known, the parties have arrived at an agreement.

The agreement means a lucrative exit for Neto on its investment in Bikurei Hasade Darom, and paves the way for the Sheva brothers to float Bikurei Sade Holdings, through which they hold their stake in Bikurei Hasade Darom. Completion of the agreement is conditional on obtaining approval by Israel Competition Authority director Michal Halperin by March 2020.

Neto and Bikurei Sade Holdings currently hold 50% each of Bikurei Hasade Darom. Under the agreement, Neto will sell its holding to Bikurei Sade Holdings for NIS 300 million, valuing Bikurei Hasade Darom at NIS 600 million. Half of the consideration, NIS 150 million, will be in the form of an allocation to Neto of shares in Bikurei Sade Holdings, which, as mentioned, is about to be floated on the stock exchange. The rest will be paid in cash: NIS 100 million when the deal is completed and NIS 50 million up to a year later. Neto estimates that the sale of its stake in Bikurei Hasade Darom will yield a pre-tax capital gain of NIS 160 million.

The agreement includes "mutual waiving of all claims of the parties against each other."

The dispute between Ezra and the Sheva brothers apparently arose from pressure by the former on the latter to buy Neto's stake in Bikurei Hasade Darom at a sensitive time for the brothers, just when they were in the process of floating their holding company. Bikurei Hasade Darom is the main holding of Bikurei Sade Holdings, which also holds a small chain of supermarkets. It is a giant in terms of the Israeli fresh produce market. The trend towards healthy eating supports increasing consumption of fresh fruit and vegetables, giving the company a following wind. Bikurei Hasade Darom is also a significant player in agricultural product imports. It is a main supplier of some of the largest food retailing chains in Israel, and has exclusivity agreements with some of them.

In the first half of 2019, Bikurei Hasade Darom's revenue rose 45% to NIS 655 million, but higher expenses damped the improvement in net profit, which rose 10% to NS 20 million.

Published by Globes, Israel business news - - on November 11, 2019

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

Dudi Ezra / Photo: Aviv Hofi
Dudi Ezra / Photo: Aviv Hofi
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