Today, Plasson Industries Ltd. (TASE: PLSN), controlled by Kibbutz Maagan Michael, reported the completion of a deal to buy 70% of the Brazilian company ATI for NIS 45 million. This price is more than double the sum it reported earlier this year, upon signing a memorandum of understanding (MOU) for the acquisition.
In the current announcement, Plasson reports finalizing the signing and implementation of the various acquisition agreements in which ATI sold 56% of its share capital for NIS 36 million (30 million Brazilian real). Plasson acquired a further 14% of ATI's shares from other shareholders for NIS 9 million (7.5 million real). Part of the payment for this deal will be provided next year.
According to its previous announcement in July, Plasson signed an MOU for the acquisition of a 70% stake in ATI for NIS 19 million (16.5 million Brazilian real according to the rates then). Plasson said then that the deal might be "finalized in a way that differs from expectations, among other things because of changing conditions and other factors that are not under the company's control." Plasson has made the acquisition via its fully-controlled subsidiary PDB, which operates in Brazil.
Plasson said today that the acquired company was founded in 2002 and focuses mainly on "producing laying nests for the eggs industry, as well as eggs sorting and handling machines." ATI has 140 employees and a reported loss of 5 million Brazilian real and revenue of 37 million Brazilian real in 2015. It had 30 million real revenue in 2014 and net profit of less than 2 million Brazilian real. At the end of 2015, its assets and liabilities totaled 37 million Brazilian real.
Plasson, which focuses on the plastics industry, has identified a market potential in Brazil despite the challenging conditions of the Brazilian economy. In the past few months, talking about its operations there, Plasson said, "Estimates in Brazil talk about a predicted increase in the production of poultry, which will be mainly earmarked for export (from Brazil). This forecast is expected to spur the building of new coops, generating demand for the equipment produced and sold by out Brazilian subsidiary."
Nevertheless, the company added, "The economic situation in Brazil (a deep recession), seems to lead to a difficulty in funding new projects using the Brazilian banks, which might make it difficult to continue expanding operations in Brazil." Plasson also said, "The Brazilian subsidiary is a leading supplier in providing products for the Brazilian poultry sector"; it also said that during 2016 it intends to begin "building a factory for livestock buildings, which will help complete the product basket for our customers."
Plasson develops, produces and markets pipeline connector accessories (connectors, valves and accessories) intended for the conveyance of liquids, gasses and communication lines, as well as livestock products which include fresh water supply systems, feeding systems, climate management equipment and more. As part of these operations, it also offers poultry sector products. Moreover, the company provides kitchen and shower accessories and other products. The company's share has risen 15% in 2016 and reflects a NIS 1.1 billion market cap.
Published by Globes [online], Israel business news - www.globes-online.com - on October 25, 2016
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