Tadiran Holdings buys Pach Taas for NIS 100m

Moshe Mamrud Photo; Eyal Izhar

Intel Israel accounted for the bulk of the acquired group's revenue.

Electrical appliances importer Tadiran Holdings Ltd. (TASE: TDRN), which is also active in Israel's energy efficiency sector, is expanding its activity to industrial air-conditioning. The company today reported that it had signed agreements to acquire 70% of the shares in the Pach Taas group, which contains the Pach Taas (Ashkelon) and D&P Clean Rooms companies, for NIS 100 million.

The acquired companies, which have an aggregate annual sales turnover of NIS 150 million, deal in air conditioning and treatment in the industrial and commercial sectors. Tadiran's share price responded to the report with a 7% jump, and has now risen 41% in the past year, pushing the company's market cap up over NIS 1 billion.

The controlling interest in the Pach Taas group companies was acquired from Pach Taas founder and co-CEO Aharon Shapira and co-CEO Avi Cohen, who currently own equal shares in the group. Tadiran will pay NIS 76.3 million for the shares in Pach Taas (Ashkelon) and NIS 23.8 million for the shares in D&P. As far as is known, the two acquired companies are dependent on Intel Israel, which accounted for 70% and 85% of the revenue of Pach Taas (Ashkelon) and D&P in 2017-2018, respectively.

The deal leaves the remaining 30% the shares in the hands of Shapira and Cohen, who will continue managing the group in the coming years. Completion of the deal is contingent on a number of suspending conditions, including approval by the Israel Competition Authority general director and approval by an important customer of the group. Tadiran said, "The acquisition of the purchased shares will be paid for from the company's independent resources, and to the extent that it is necessary on the date of completing the deal, also through external financing." The agreements establish a mechanism of options for sale of the rest of the shares in the Pach Taas group to Tadiran. The options are exercisable for a three-year period, starting three years after the date on which the deal is completed.

Pach Taas (Ashkelon)'s activity includes industrial air-conditioning involving semiconductors, pharma, construction, and agriculture. The company has a planning arm, a production arm, and a contracting and construction arm. It manufactures and assembles complex air-conditioning systems specifically adjusted to the customer's requirements.

D&P operates in the clean rooms field, including the design, production, and founding of clean rooms for the semiconductor and pharma industries. It also manufactures supplementary products for clean rooms.

The two companies operate in adjacent factories in Ashkelon and in a building in Kiryat Gat. The group has 250 regular employees, plus additional employees as needed by the group. Pach Taas (Ashkelon)'s revenue totaled NIS 111 million in 2018, with a NIS 15 million operating profit and an NIS 11 million net profit. D&P's revenue last year was NIS 36 million with a NIS 9 million operating profit and a NIS 7 million net profit.

Tadiran said that it would also probably acquire 70% of the shares in three other private companies controlled by the Pach Taas group controlling shareholders and other parties. These companies operate in the field of acclimatization and heating for intensive crops, industrial air-conditioning contracting, and clean industry systems.

Tadiran Holdings, controlled by CEO Moshe Mamrud imports, manufactures, and markets air-conditioners and air-conditioning systems for the home, commercial, and industrial markets, mostly under the Tadiran, Amcor, and Toshiba brands. The company also offers "small" electrical appliances for home and office use under the Crystal, Amcor, Tadiran, and Spectra brands, after deciding in 2015 to discontinue its activity in marketing white products (refrigerators, dishwashers, ovens, etc.) in order to focus on its regular energy and air-conditioners activity.

"As part of Tadiran's strategic plan, we marked the commercial and industrial air-conditioning fields as growth engines. Acquiring control of the Pach Taas group makes Tadiran the leading group in industrial air-conditioning, strengthens it in commercial air-conditioning, and is significant for us in achieving one of the group's goals," Mamrud said.

Tadiran's sales totaled NIS 173 million in the first quarter of the year, 17% more than in the corresponding quarter last year. Quantitative sales of air-conditioners rose, and the company recognized revenue from an energy efficiency project it carried out in a hospital. Operating profit grew 39% to NIS 13.2 million, and net profit totaled NIS 7.6 million, 22% more than in the corresponding quarter last year.

Published by Globes, Israel business news - en.globes.co.il - on July 3, 2019

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

Moshe Mamrud Photo; Eyal Izhar
Moshe Mamrud Photo; Eyal Izhar
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