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Dor Alon is negotiating the purchase of the AM:PM convenience store chain. Dor Alon is expected to pay NIS 140 million for 100 percent of the company, and will make the purchase through its subsidiary that operates its Super Alonit stores.

It is interested in building a chain of urban convenience markets open seven days a week, as well as expanding its Alonit convenience stores in city centers.

AM:PM has 18 stores, all in the Tel Aviv area, and most in the city. The stores are all open 24 hours a day, seven days a week. Back when the chain had only 12 stores, the chain's value was estimated at NIS 100 million.

Dor Alon, owned by David Weissman, Africa Israel and the Kibbutz Movement purchasing organizations, also owns supermarket chain Blue Square.

AM:PM was founded in 2001 by three partners: Guy Edri, and the brothers Gal and Ron Belinkis, shortly after they finished their army service.

Originally the stores were similar to kiosks open 24 hours a day. The business plan was to keep the stores open all day and night, while charging the higher prices that mark convenience stores, as opposed to supermarkets.

The business concept took Tel Aviv by storm, in particular the younger generations, and the brand quickly spread out all along the main thoroughfares of the city. Recently the Tiv Taam chain has opened competing stores.

AM:PM had revenues of NIS 137 million in 2005, according financial reports previously published in TheMarker; this was a rise of 32 percent over 2004 revenues. Estimates are that the company will finish 2006 with sales of NIS 170 million.

The company is profitable, and the owners withdrew NIS 3.5 million in dividends in 2005. Gross profits were NIS 34.2 million in 2005, meaning the chain has a gross profit margin of 25 percent - and the figure is rising. This is similar to the profit margins at most of the large supermarket chains.

Operating profits were NIS 6 million for 2005, or 4.4 percent of sales. In 2004 profits were NIS 2 million, or 1.9 percent.

The chain finances itself through its current operations - meaning credit supplied by its suppliers - and not through its own capital. It has very little debt, owing only NIS 1.3 million to the banks in 2005.

Talk of a public offering has come up a number of times in the last year, and at the same time the chain has been negotiating with several parties over an outright sale.

Dor Alon had 79 stores in its Super Alonit chain at the end of 2005, 58 of which are run by the same subsidiary that will buy AM:PM. It is expected to have opened another 15 by the end of 2006.

Dor Alon responded to this report by saying that it would make a report to the stock exchange when and if it was required to do so.