Roundup / Coffee gives Strauss a buzz
Partner stands at risk of a creditor takeover, while long Israeli lifespans hit Harel hard.
No dancing, no dropping: "We didn't dance on the rooftops when we heard Hutchison was coming in, and we won't be jumping off the roof if they don't come," said a source near Partner after Hutchison pulled out of its planned acquisition of mobile operator. To wit: "We didn't succumb to euphoria, and we won't go into depression," the source elaborated. Meanwhile Partner CEO Haim Romano, formerly of El Al, has been trying to soothe bothered breasts among the company's alarmed employees. "I want to advise you that Scailex Corp, which owns the controlling interest in Partner, announced that Hutchison canceled the agreement," he wrote in a letter to workers. "As I have said before, the changes in the company's ownership will have no effect on the company's operations and day to day commitment."
Partner's probable fate – takeover by creditors, says Psagot: So Partner people say the fact that the Hong Kong company Hutchison withdrew its offer to buy Scailex (which controls Suny, which controls Partner) won't impair Partner's day-to-day operations. But equity analysts at the Psagot investment house suspect otherwise. Why is that? Because barring a buyout by somebody else, the most likely scenario is that Scailex's creditors will assume control over it, which boils down to control over Partner. Who are Partner's creditors? Mainly Partner's bondholders, and Hutchison. Since their interests could diverge, the outcome could be friction over how best to manage the company, warns analyst Ilanit Sherf. That friction could impair routine operations at Partner. By the way, Hutchison is a creditor because Suny bought Partner from it in the first place, in part using a seller's loan from Hutchison. Suny still owes it $300 million.
Coffee stimulates Strauss growth: For all that not a coffee bean grows in Israel, Strauss Group has become quite the world power in the stimulating quaff. Strauss on Wednesday reported netting NIS 41 million in the second quarter, up nearly 60% from the corresponding quarter of the year before. It attributed much of the leap to growth by its coffee business and by its Sabra salads business (think hummus, baba ganoush, spicy carrots and that sort of thing). Strauss may not grow the bean in Israel but it has vast international coffee buying, processing and marketing array, one that helped boost total sales to NIS 1.9 billion in the quarter. Almost half of that sum, dear reader, was from its coffee business. By the way, Strauss sales in Israel didn't budge, staying at about NIS 680 million in the second quarter.
Israelis living long and prospering hits Harel: Like other insurance companies in Israel, Harel reported a loss for the second quarter of 2012 because of heightened provisioning for its clients living, and living, and living. In short, the lengthening lifespan of Israelis – as advised by the insurance commissioner over at the Finance Ministry – has played havoc with actuarial estimates. So, Harel reported a loss of NIS 57 million for the quarter, compared with netting NIS 13 million in the corresponding period of the year before. Yet dry those tears: For the first half-year Harel reported netting NIS 230 million, an increase of 150% from the year before. You wonder how much longer Israelis are living? One to two years more than previously estimated, according to the commissioner.
Trust nobody, cautions Clal Finance: Sage advice in general, and beware all investment avenues in particular at this uncertain time, according to Clal Finance. Not very helpful, one must say. Markets edged up this week in anticipation of another European summit, and Greece started to feel a little better, says chief economist Amir Kahanovich – "The sun is shining and the criticism about the Greeks ebbed as Spain and Italy deteriorated" – terrific. But there's no telling what the Germans will be feeling about the Greeks later this week, and there is always the specter of war with Iran. The thing is that whatever anybody may say about "safe harbors" and the like, war demolishes certainties. Note, points out Kahanovich, that in contrast to the consensus, when America was downgraded its bond yields actually dropped.
Elad Canada profit plunges: Elad Canada, which handles real estate and energy baron Yitzhak Tshuva's investments in North America, reported netting $724,000 Canadian dollars in the second quarter of 2012, about a tenth of its profit in the corresponding quarter the year before.
With reporting by Yoram Gabison and Eran Azran