Apax CEO Goes to China to Discuss Possible Tnuva Sale

Bright Food Group may partner with Israeli food giant’s other owners for control, at a company valuation of at least 8.5 billion shekels.

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Apax Partners Israel CEO Zehavit Cohen visited China this week for talks on selling a controlling stake in Tnuva Food Industries to the Chinese state-owned Bright Food Group. Apax Partners Worldwide, the London-based private equity firm, is looking to sell its 56% stake in Tnuva a deal valuing the company between 8.5 billion shekels and 8.8 billion shekels, according to sources who asked not to be identified.

One option on the table, say the sources, is creating a controlling stake in Tnuva by selling Apax’s stake to Bright Food and partnering it with Mivtach Shamir Holdings (21.7% of Tnuva) and a group of kibbutzim and moshavim (23%). Keeping Israeli groups in as owners of Tnuva is expected to soften public criticism in Israel of giving a say in the company’s management to a foreign company.

Meanwhile, Tnuva is moving ahead with plans for an offering on the Tel Aviv Stock Exchange in the second quarter of the year. The company’s valuation and initial public offering plan have been adversely affected by the recent decision to place two of the company’s top sellers, 38%-fat heavy sweet cream and 5% white cheese under government price control. The subsequent reduction in both products prices reduced Tnuva’s annual Ebitda by between 70 million and 80 million shekels. That, in turn, is expected to reduce the company’s market value at the stock offering by hundreds of millions of shekels.

Bright Food, a food and beverage company owned by the Chinese government, is China’s second biggest food manufacturer. It has four publicly traded subsidiaries, including dairy producer Bright Dairy & Food.

Bright Food has moved to acquire a number of food manufacturers outside the Chinese domestic market in recent years. In May 2012, it bought a 60% stake in British breakfast cereal manufacturer Weetabix for 1.2 billion pounds ($1.97 billion). The company bought a 75% stake in the Australian Manassen Foods for $516 million in August 2011. In July 2010, Bright Food acquired a 51% stake in New Zealand dairy producer Synlait for $58 million.

Apax Partners Israel CEO Zehavit Cohen. The archive photo shows her speaking to protesters outside her home in September 2011, before she stepped down as Tnuva chairwoman.Credit: Moti Milrod

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