Using the cash horde he gained control of when he bought the former high-tech company Emblaze, Ukranian businessman Alexander Granovsky said on Monday he is buying a majority stake in Willi-Food, whose hundreds of canned goods, frozen food products and cheeses are familiar to every Israeli shopper.
Granovsky, who was briefly allied with Nochi Dankner in the fallen tycoon’s efforts to retain control of IDB group, will pay 268 million shekels ($76.8 million) for 58% of Willi-Food from brothers Zwi and Joseph Williger through his holding company BGI.
BGI will also make a tender offer for another 4% of Willi-Food shares, which, if successful, will raise the total value of the acquisition to 285 million shekels and leave Granovsky with a 62% holding.
“We looked for investments in companies that have human capital and growth engines in Israel and abroad. It’s not easy to find such deals, but we identified Willi-Food as a company that meets those conditions,” said Yossi Schneorson, CEO of BGI and Granovsky’s representative in Israel. “We think Willi-Food has the potential to expand in the United States.”
The Williger brothers will remain with the company as managers, said Schneorson. “They have proven themselves as professionals. We’ll handle the investments,” he added.
Willi-Food, which manufactures and markets over 600 products and is one of the leading food importers in Israel, has more recently set its sights on developing overseas markets. It turned in a 21 million-shekel net profit in 2012, which rose to 33 million shekels in the first nine months of last year.
BGI will pay 34.71 shekels a share for Willi-Food, a premium of close to 29% over the stock’s opening share price on the Tel Aviv Stock Exchange on Monday. Shareholders’ equity was 405 million shekels at the end of the third quarter of 2013, reflecting a 12.8% control premium on the sale. Despite that, Willi-Food fell 3.6% in TASE trading on Monday to close at 26 shekels.
The Willi-Food deal marks another development in the unusual business relationship that has developed in recent months between Granovsky, the Williger brothers and Dankner. Willi-Food was part of the group of investors led by Dankner and Granovsky that was put together in a failed effort to retain Dankner’s control of the conglomerate through a debt restructuring.
The Willigers have had close working relations with Dankner for years, as the IDB group subsidiary Super-Sol, Israel’s largest supermarket chain, is a major retailer of Willi-Food products.
Before completing the Willi-Food acquisition -- and most likely in preparation for it -- Granovsky flattened the pyramid of holdings of BGI to a single publicly traded company in Israel, thereby putting the group in conformity with the Business Concentration Law approved by the Knesset in December. Shares of BGI were distributed as a dividend, with the controlling shares going to the parent company ZBI. BGI now serves as a vehicle to control Emblaze, a shell company with $142 million in cash on its books, which Granovsky bought six months ago.
After the Willi-Food acquistrion is completed, Granovsky’s pyramid will include four tiers of companies in three countries. At the top will be the Chabad 770 charity organization registered in The Netherlands and closely held. Next down will BGI, which is publicly traded in Israel; below that Emblaze, which is traded on the London stock exchange; and at the bottom Willi-Food.