Ishay Davidi's FIMI is buying half of Polgat Textiles, Bagir
Deal under negotiation prices Bagir at roughly its market cap, Polgat Textiles at $40 million
Ishay Davidi is in advanced negotiations to buy half of Polgat's (TASE: PLGT) holdings in two subsidiaries: the Bagir fashion chain, and Polgat Textiles.
Polgat and Bagir belong to Zvika Barinboim and Ofer Gilboa.
Davidi is conducting the negotiations through his equity fund First Israel Mezzanine Investors.
The parent company Polgat is traded at a market cap of NIS 200 million. Bagir is also publicly traded and is worth around half a billion shekels. Polgat Textiles is privately held.
FIMI would be paying roughly the market value for Bagir, $60 million for the 50% stake. If it also buys 50% of Polgat Textiles, which the mezzanine fund is expected to do, it would be paying $20 million more.
Following the transactions, assuming they come off, Bagir and Polgat Textiles are expected to merge, leaving Polgat and FIMI each owning half of the consolidated company.
Following that, Davidi and Barinboim are likely to expand the company's operations outside Israel, through acquisitions. Later they plan to float it as well, preferably on Nasdaq.
Already pursuing that strategy, last week Bagir bought a German textiles company for 10 million euros.
Bagir CEO Ofer Gilboa - who Barinboim highly esteems - is expected to take the reins at the merged joint company, while involving FIMI talent to the strategic management.
FIMI is one of Israel's most active private equity funds. It prefers exports-oriented companies, and does not scorn traditional industries. Among its investments were Lipman Electronic Engineering, Tadiran Communications (TASE: TDCM) and Tadir-Gan Precision Products (TASE: TDGN).