Revital Levi and Merav Cohen, the founders some 20 years ago of Israel’s Laline retail chain, which sells toiletries and soaps and personal items, plan to sell a 25% stake in their company to an unnamed overseas cosmetics company at a company value of 350 million shekels ($99 million).
They are selling another 1% to the Fox Group, the Israeli fashion and houseware retailer that already owns a 50% share in Laline.
That would hand the women, who are in their late forties, 91 million shekels for the 26% stake. The sale is the subject of what was described as a non-binding memorandum of understanding. In addition, however, the overseas buyer has an option to acquire full ownership of Laline over the next four years, for another 110 million shekels, which would hand the pair 200 million shekels in the event of such an exit. The proceeds are in addition to 13 million shekels that Cohen and Levi received in 2007 when they sold the 50% stake in Laline to Fox.
“I’m very excited. I’m still asking myself what happened here,” Levi told TheMarker on Tuesday. There really was a lot of luck here, and the road wasn’t easy. I’ve been living this brand every hour.”
Laline has 107 retail locations in Israel and one in New York, at Times Square. It also has 25 franchised locations in California, Hawaii and Japan. The chain, which has a workforce of 650, is also planning to open a store in Toronto. The first Laline store was at Kikar Hamedina in Tel Aviv, Levi said, but there wasn’t enough foot traffic there, so they opened on Sheinkin Street and then expanded to the Seven Stars Mall in Herzliya. After expanding to 15 stores, she recalled, they were approached by Fox.
For its part, Fox reported in reference to the overseas party that it would be bringing a “strategic partner” into Laline that would help in expand in overseas markets. Fox signed a non-binding memorandum of understanding, along with Levi and Cohen, with a party described simply as “an international holding company.” Although Fox didn’t disclose the company’s identity, it said that the oversees firm has “extensive operations in the field for personal care and cosmetics products in the international market.”
The memorandum of understanding gives the parties an exclusive period of 40 work days in which to finalized the details of the purchase and for the buyer to carry out due diligence. With the additional 1% stake in Laline that it is to acquire, Fox will end up with a 51% of the cosmetics retailer. The overseas partner would have 25% and Cohen and Levi would collectively have 24%.
If the overseas firm exercises its option to acquire full ownership of Laline, it would be a price tag that is the higher of 450 million shekels or twice Laline’s annual sales and 12.5 times Laline’s earnings before interest, taxes, depreciation and amortization, subject to a formula to be worked out.
Want to enjoy 'Zen' reading - with no ads and just the article? Subscribe todaySubscribe now