From Gaydamak, with interest
At the height of the soccer league dead season, the patron of the Beitar Jerusalem soccer club, Arcadi Gaydamak, burst onto center-stage of the stock market. Burst? Exploded.
He entered many an Israeli life through the sports pages and the Sunday evening soccer match. He entered many more metaphorically perched on a white charger and rescuing the distressed (the Nitzanim tent city for refugees from the north during the Second Lebanon War, then taking the missile-stunned residents of Sderot on holiday). Then there was his grandiose barbecue for the masses in Park Hayarkon on Independence Day. Now Gaydamak has evidently decided to become a local business tycoon.
♦ Bought Ocif Investment & Development (TASE: OCIF) for NIS 600 million, twice its market cap at the time;
♦ Acquired, last Monday, portfolio and mutual funds management company Gilon Investments (TASE: GILN) for NIS 84 million;
♦ Purchased, as the week neared its close, Ameris Holdings, which controls Petro Group gas stations and convenience stores in the U.S., for NIS 172 million;
And while about it he almost bought Ma'ariv Holdings (TASE: MARV), Israel Land Development Corporation (TASE: ILDC) and Minrav (TASE: MNRV). Rumors are boiling that he also means to buy egg products'n'chicken-coops company Cham Foods (TASE: CHAM) and that he's negotiating to buy Neto foods.
Though the companies do completely different things, the transactions have several thing in common.
His negotiations in each case lasted anywhere from hours to a few days, no more. All the transactions were mediated by Ronni Mana and all involved companies listed for trade on the Tel Aviv Stock Exchange. And in all cases, Gaydamak agreed to pay far beyond the market value of the companies. He committed to NIS 1.3 billion in payments (remember, he's buying controlling interests, but not all the shares) for controlling interests in NIS 3 billion worth of corporate Israel.
No fiddling around with dollars and cents
At the moment, Gaydamak, who lavished his largess on philanthropic causes without counting pennies, seems to running his business on something other than pure economic sense. He's buying companies at inflated prices that would make even provident funds and insurance companies - which manage other people's money - blanch.
A few weeks ago Amit Berger and Kobi Tribitch sold the Tiv Taam chain to a TASE-listed subsidiary, Enter Holdings, and diluted their stakes at a company value of NIS 380 million. They did that even though they held an appraisal from Giza-Zinger, that the non-kosher chain was actually worth NIS 446 million.
The reason they accepted the lower price was pressure from Migdal Insurance (TASE: MGDL) , which held a minority stake in the company that bought Tiv Taam. Tribitch and Berger sold and kept their peace.
Now suddenly the white knight rides in on his charger, seeking recognition and legitimacy, and buys the company at a company value of NIS 820 million.
The prices he's paying are the result of tremendous velocity and force. Gaydamak isn't going to fiddle around haggling. He doesn't study the financials, read the books, examine the competition, the customers, the suppliers and workers. His modus operandi indicates that Gaydamak didn't come to do business: he's looking for something else entirely.
He has rivers of liquid money and clearly has decided to become a dominant factor on the TASE and in Israel's economy, and to devil with how much it costs. And if it also makes him some money, well and good.
Kobi Tribitch is also recouping some value lost last year. Tiv Taam had been founded in the 1970s by his father Yehuda, as a pig breeding and pork marketing enterprise in the north. After Yehuda passed away in 1989, the son Kobi developed the business. It started as a small processing plant and delicatessen selling mainly to Russian immigrants. But rising standards of living and the search of trendies for delicacies close to home, rather than abroad, led Tribitch to expand to a chain.
As the big supermarkets stumbled into trouble, Tribitch opened a chain of "customer-experience" oriented stores, and bought the Mizra non-kosher meat processing plant.
But then a year and a half ago, a bombshell exploded. The Kolbotek consumer watchdog show, massively popular brainchild of Rafi Ginat, secretly taped three separate Tiv Taam branches merrily marketing rotting chicken as "spicy shwarma" and the like. The fowl expose caught Tribitch just after he'd massively expanded in the chain and opened new branches.
Tribitch was in trouble. Bad press, customer seepage and mainly - banks pressing him to find financing. He found his savior in the form of Amit Berger, who had just completed a really terrible round of the capital market, having paid Bank Hapoalim much too much for the PKN ("Pekan") mutual funds management company. He then lost control of the whole shebang because he couldn't find the financing.
Berger bought half of Tiv Taam from the troubled Tribitch for NIS 250 million. As last week ended, they could smile again. That $100 million that Ginat hacked off Tiv Taam's value was coming home again, thanks to Gaydamak, with interest.