Zabeida joins Gaon in buying Ace chain
Gaon Holdings is planning, along with former Ace Buy & Build partner Shlomo Zabeida, to exercise a right of first refusal and bid for the DIY chain by tomorrow afternoon's deadline.
The group will offer $20 million to buy out Gad Zeevi's share in the chain. The offer values Ace at $28 million, and is identical to private equity fund Markstone's winning bid.
Only two parties submitted bids for the Ace chain - Markstone and Zeevi, whose financial woes put the chain on the block in the first place. Ace is up for sale as part of the liquidation of the Galaxo group, which Zeevi controlled and which is now in receivership.
Zeevi fought against the receivership, but lost in court earlier this year. Once Judge Danya Kareth Meyer had settled the matter, Galaxo's receiver put its stake in Zeevi Holdings - owner of the Ace and Auto Depot chains - up for sale.
Markstone put up guarantees, but Zeevi refused, claiming Galaxo's receiver should first indemnify him against future claims. The receiver refused and Zeevi sued, asking the court to recognize his bid, which was highest, as legitimate. The Gaon-Zabeida group had offered $17 million, pricing Ace at only $22 million.
In 1999, Galaxo bought out the Ace chain, which was set up in 1993. Zeevi then entered a partnership with Shlomo Zabeida, after Zeevi bought the Auto Depot chain, which had been owned by Zabeida, from its creditors.
Auto Depot runs 12 outlets and Ace operates 25 branches. Ace reported net profits of NIS 9 million for 2004 on sales of NIS 570 million. Its operating profits for 2004 soared 40 percent to NIS 13.5 million.
Zeevi and Zabeida are currently in litigation over exactly how much of Ace belongs to Zeevi. Their fight also centers on an additional 11 percent stake in Zeevi Holdings and over the rights to sell Ace. According to an agreement between the two, Zabeida holds a veto over any sale of the chain, even if the stake is in the hands of a receiver and up for sale.
The legal squabbles may have had their toll, explaining why the original pool of 10 companies interested in Ace dwindled to two by the bid stage.
"The acquisition is transpiring as part of a broad strategic process of Gaon Holdings to deepen its retail operations," Gaon CEO Shai Preminger said.
Gaon Holdings currently concentrates more than 95 percent of its operations in three primary areas: retail, financial services and agrobusiness. Preminger added that the Gaon-Zabeida group's goal is to develop more Ace and Auto Depot chains and to expand their operations both here and abroad.