Clal Industries Selling Controlling Stake in Hadera Paper to FIMI Funds

Deal values company, which has been saddled with debt due to falling paper prices, at 600 million shekels.

Itzik Ben-Malki

Clal Industries has sold its entire 59.1% stake in Hadera Paper to FIMI Opportunity Funds, the country’s largest private equity fund, for 355 million shekels ($94.5 million), the companies said on Wednesday.

The deal values Hadera Paper, which manufactures packing paper, cardboard and writing paper and has been hit by falling paper prices, at 600 million shekels — higher than its current market value, even at the end of Wednesday’s trading, of 516 million shekels. Hadera Paper’s shares were up 11.83% for the day in Wednesday’s trading in Tel Aviv.

Clal Industries is controlled by U.S.-based Access Industries, which was founded by Ukrainian-born American billionaire Len Blavatnik. The deal is still subject to various conditions, including approval from the Antitrust Authority.

Hadera Paper has been burdened by low profitability due to the decline in the price of computer paper as the public has shifted to digital devices that forgo printouts. The company has also suffered heavy losses in its disposable diaper business and its paper business for the Turkish market.

It had 165 million shekels in operating losses between the beginning of 2013 and the end of March, which forced it to sell off assets to reduce its debt burden. The most notable sale was its half interest in Hogla Kimberly to its partner, Texas-based Kimberly-Clark, for 648 million shekels.

Hadera Paper’s major areas of operation are paper production for cardboard packaging; collection of paper for recycling (through its Amnir subsidiary); packaging for agricultural, food and cosmetics products; and computer printing paper.