A fascinating legal battle is being conducted these days in the economic affairs division of the Tel Aviv District Court. On one side are two well-known businessmen: Ronnie Gat, one of the owners of the Jafora-Tabori soft-drink giant, and Shlomo Rodav, the former chairman of Tnuva. The two are owners of publicly-traded Kerur Holdings, which owns a third of the shares of Tapugan, the largest Israeli French-fry manufacturer.
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Facing them is Shuki Sharon, who owns a third of Tapugan too. Sharon is a relatively anonymous businessman, even though those in the know say his holdings are worth between 500 million and 1 billion shekels (or roughly $125 million to $250 million).
The fight began after Sharon, along with Topap Industries, the third partner in Tapugan, asked to sell his shares in the company less than a year ago to private equity fund Kedma Capital at a company value of 250 million shekels. Rodav and Gat, who had a right of first refusal, vehemently objected, which quickly led to mutual accusations and the legal battle in court.
“In practice, Kerur and Rodav took control of the company and they are doing with it as they please, while depriving the other shareholders [of their rights],” claimed Sharon. “With thuggery and aggression they are dictating their position time after time to the board and shareholder meetings.”
Sharon says Rodav prevented him from selling his stake, “aggressively” and “not in good faith,” and has not allowed the distribution of a 35-million-shekel dividend.
Rodav, who was sued personally, has denied all the claims and even counterattacked, saying “the entire purpose of the lawsuit is to impose illegitimate pressure in a personal manner.”
Sharon claims Rodav threatened Kedma that Kerur would sue if they bought Sharon’s shares in Tapugan. At the same time, says Sharon, Kerur and Rodav conducted negotiations on their own behalf with Kedma.
Rodav denied the claims, saying Sharon sued him to put pressure on him and “obstruct justice.” He says he did not object in principle to the dividend, but the amount requested was “enormous.” Paying a dividend would require preparing a multi-year forecast of revenues and investments, and that is why he decided against it as chairman of the board, said Rodav.
The potato king
Sharon, 60, who is ultra-Orthodox, lives in a house on Bodenheimer Street in northern Tel Aviv. His businesses focus mostly on growing and selling potatoes, as well as real estate, mostly in areas that used to be potato and onion fields, or large refrigerated warehouses for agricultural produce, owned by the family. He owns a third of Ego Growers, one of the largest potato companies in Israel, which grows, packs and sells potatoes, and has a large packinghouse in the Negev. The private company has estimated annual sales of 250 million shekels, and a 15% share of Israel’s potato market.
“He is a man with enormous assets, who over all the years is careful to distance himself from the media and public attention,” said someone in the real-estate industry who knows Sharon’s businesses. “He is from a family that turned into an empire because of potatoes, and he continued to make more and more money, mostly because of his real-estate business.”
The founder of the family business was the father, Shlomo Sharon, who is now in his mid-90s. Shlomo Sharon, a Holocaust survivor, immigrated to Israel and moved to Ramat Gan, where his two sons were born – the oldest, Shuki, and Ronnie.
Shlomo began selling fruits and vegetables in the wholesale market in south Tel Aviv. In the early 1950s, when the market moved north to central Tel Aviv, to the corner of Carlebach and Hashmonaim Streets, Sharon moved with it. At the same time, he bought a refrigerated warehouse for potatoes, his main business, near the market. Later Sharon converted the warehouse into an office building, part of which he rented to the produce export firm Agrexco.
Yuvalim Properties S. Sharon, the private company that controls most of the family businesses, has its offices there too. The family also owns property in Tel Aviv and Rishon Letzion that used to serve as refrigerated warehouses for agricultural produce.
In addition to his real-estate holdings, Shlomo Sharon became one of the biggest players in the potato industry, which was then concentrated in the Sharon region northeast of Tel Aviv. In the 1970s and 1980s, Sharon and Tnuva divided up the potato market, with Tnuva getting a 70% market share and Yuvalim 30%. He was known as the “potato king.”
The family owned a large packing house in the Sharon community of Ra’anana at the time and bought more land, which they leased out to farmers. At some point Shuki entered the family business. In the 1980s, they began to move the potato business south to the Negev, while freeing up the land and rezoning it for construction. They also bought Sharon region land in Pardesiya.
Another foundation of the family fortune was a partial ownership of the wholesale fruit and vegetable market in Tel Aviv. When the market was sold for real-estate development, each share was worth some 20 million shekels, and the Sharons owned at least four shares. “They made a lot of money there, but even before that they were wealthy,” said former Tnuva CEO Yitzhak Landsman.
Shuki Sharon is considered the main mover behind the family business today, and is involved in every decision made, down to the smallest detail. He has a very small team of employees in Tel Aviv. He has decided not to sell off the properties his father bought in the center of the country decades ago, but is first working to raise their value by changing zoning, filing building plans, building his own properties and renting them out or selling them to the end customer, said a source active in the real estate business who knows the Sharon family business well. “His strategy is to do the work from the beginning to the end. He very much likes to work ‘under the radar.’”
The family is known too for its connections not only in potatoes, but with agricultural institutions such as Tnuva and Agrexco. These are not the family’s only connections, and over the years they became quite well-connected with the leadership of the ultra-Orthodox community.
Shuki Sharon is considered quite close to Rabbi Yosef Efrati, a leader of Degel Hatorah and expert in kashrut matters. Ronnie Sharon lives in Jerusalem, and is considered close to the circles of the late leader of the non-Hasidic ultra-Orthodox community, Rabbi Yosef Shalom Elyashiv; and to Rabbi Shmuel Auerbach, the leader of a more extreme Haredi faction in Jerusalem.
Shlomo Sharon carefully developed connections with powerful figures over the years, who helped out his businesses. His name was mentioned in the verdict of the former head of the Merhavim regional council Avner Mori, who was sentenced last April to 13 months in prison for bribery and election campaign financing violations in a plea bargain agreement. Mori received 34,000 shekels from Sharon for his campaign in 2007, and was convicted for receiving an illegal campaign contribution from a corporation.
Yuvalim, which provided the money, operates in the area of the Merhavim council. It sells potatoes grown for it there by the Moshavei Hanegev company, the largest agricultural production company in Israel, which is owned by 34 cooperative moshav communities in the region.
In at least one large real-estate deal, it is known the Sharon Family made use of former senior officials from the civil service. In the mid-1990s Shuki Sharon began to rezone agricultural land in Kfar Sava, west of Route 4, along with other families from the area. Joseph Kolodny, the former chief architect of Kfar Sava, recommended to land owners in the area to increase the size of the construction plan to improve the chances for zoning changes. After a decade, the plan was approved and Sharon received the rights to build 72 housing units and 3,800 square meters of office space, which was worth 30-40 million shekels in 2006.
Despite his advanced age, Shlomo Sharon seems to still be involved in the family business. In 2007, he was the one who met with Mori and promised him a campaign contribution. In June 2015, the family proposed appointing Shlomo Sharon as a director in the company.
Five truck drivers who worked for decades hauling agricultural products for the family business filed suit in the Labor Court, and asked to put Shlomo Sharon on the stand in 2005. Shuki Sharon refused, telling the court he was elderly, over 80, and in poor health, and had recently had a catheterization. In the end, after receiving medical documentation, the judge ruled he could testify.
Even though the family is ultra-Orthodox, one of its largest customers is McDonald’s, most of whose branches are not kosher. For years Tapugan has a special production line dedicated only to French fries for the American fast-food chain, and met its special standards. The contract between the two is now ending after McDonald’s franchisee in Israel Omri Padan decided to import potatoes instead.
The Sharon family is careful during the “shmita” Jewish agricultural Sabbatical year (including last year on the Hebrew calendar) not to make any profit from Tapugan, and it can be assumed the same holds for its other agricultural businesses. So last year the family loaned their shares to their partners in Tapugan, something which arose in the lawsuit against Rodav and Gat, who then claimed Sharon could not sell those shares in Tapugan since he did not own them last year. Sharon counterattacked, saying the agreement related only to the profits from the Sabbatical year and not ownership, and that Kerur abused this agreement to prevent the sale. It seems this claim was later dropped by both sides.