Israeli Fabrics Company Avgol Sold for $314 Million to Thailand’s Indorama Ventures

Deal values maker of nonwoven fabrics at a big premium to market price

The interior of the Avgol factory in Barkan, Israel.
ללא קרדיט

Control of Israel’s Avgol is being sold at a generous 1.7 billion shekels ($480 million) valuation to the Thai industrial group Indorama Ventures, the companies said on Sunday, sending the shares sharply higher.

Indorama will pay 5.78 shekels a share, or about $314 million, the maker of nonwoven fabrics used in products like disposable diapers and feminine hygiene products. The sellers are the British private equity fund Ethemba Capital, which owns 50.8% of Avgol through its Dutch-based HRH International subsidiary, and Leumi Partners, a subsidiary of Bank Leumi, that holds 15%.

The price represented premium of 60% on Avgol’s Tel Aviv Stock Exchange-traded price before the announcement and even though terms of the sale were leaked last week, the official news carried the shares up 6.7% to 4.22 shekels.

Bank Leumi said it expected a pre-tax gain of 118 million shekels from the sale, which is expected to be completed during the second half of 2018, subject to regulatory approvals, Indorama said.

Avgol has about a 10% global market share for nonwoven fabrics, a market that is expected to enjoy annual growth on average of 4.9% and even a pace of 8.2% in India. Although it is based in Bangkok, Indorama Ventures is controlled by the businessman Aloke Lohia

A global chemicals company with 75 production sites in 25 countries, Indorama Venture has 2017 revenue of US$8.4 billion. Avgol has suffered hard times recently: Prices for resin, its chief raw material, have risen sharply, cutting pre-tax profits 80% in the 2017 fourth quarter to just $1.8 million.

However, its sales have continued rising, and after a 12.7% increase year on year in the quarter, they breached the $100 million mark for the first time in the company’s history.