Benny Gaon, owner of Gaon Holdings, signed an agreement in principle yesterday to buy a major stake in Metzerplas.

Gaon will complete the acquisition through his company Gaon Agro Industries, which spearheads his group's activity in the field of water and irrigation.

According to the deal, Gaon Agro will invest NIS 33.5 million in Metzerplas, based on a NIS 100 million valuation of the Kibbutz Metzer-based company. In return, Gaon Agro will receive 25.1 percent of Metzerplas's shares. In addition, Gaon Agro will receive options to acquire another 11 percent of the company for an additional price of NIS 28.4 million five years from the date of the deal's completion.

The deal requires regulatory approval, including from the antitrust commissioner, as well as approval from Metzerplas's bank creditors.

Metzerplas produces sprinklers, irrigation systems and pipes for irrigation and communications. Its turnover in 2005 was NIS 127 million, and its net profit was NIS 9.5 million. Metzerplas's assets total NIS 108 million.

Metzerplas CEO Reuven Sarig said recently that the company was expecting a strategic investor to bring it added value, mainly by developing ventures abroad. Sources close to the deal said that other companies, such as Markstone Capital Group, The Katzir Fund and Australian magnate John Gandel were also interested in investing in Metzerplas.

Gaon Agro is a publicly traded company, which deals primarily in the water infrastructure industry and in water related projects. It owns the Middle East Tube company, which produces water and gas pipelines, Via Maris Desalination, Hakokhav Valves Industries and Rimon Consultancy and Management Services.