Yenot Bitan Poised to Buy Mega

Court blocks creditors from weighing rival bids by Rami Levi, Ben-Moshe.

Ofer Vaknin

Supermarket chain Yenot Bitan moved closer to gaining control of the Mega chain, vaulting into second place among Israeli food retailers, after two key rivals for Mega lost courtroom appeals to keep their bid in contention.

In addition, Bank Hapoalim is expected to support Yenot Bitan’s offer when Mega’s creditors meet today to approve the bid, sources told TheMarker yesterday. Holding some 290 million shekels ($75.4 million) of Mega’s 1.2-billion-shekel debt, Hapoalim is the supermarket chain’s biggest creditor.

Yenot Bitan’s offer needs the approval of creditors holding at least 75% of Mega’s debt, or 50% of all those voting.

The creditors’ meeting is the next, though not final, step before Yenot Bitan can buy Mega. If the sale does go through, Yenot Bitan will add some 125 stores to its stable of 80. Its bid was chosen earlier this month by Mega’s court-appointed trustees, among six submitted in an auction.

Two of the losers — discount grocer Rami Levy and Moti Ben-Moshe, an Israeli-German businessman who is in the process of buying Mega’s parent company Alon Blue Square — raised their bids after the auction was conducted and have sought to block or delay the sale to Yenot Bitan.

Yesterday a court refused their demand to be allowed to submit their improved bids to today’s creditors’ meeting. Central District Court Judge Ilan Shilo, who is overseeing the Mega bankruptcy and who approved the sale to Yenot Bitan, subject to creditor approval, said he didn’t find the raised bids convincing, especially as Rami Levy would have reduced its offer for each Mega store that antitrust regulators bar it from buying.

The judge did leave open a possibility for the plaintiffs to present their bids in the event creditors reject the Yenot Bitan offer.

Ben-Moshe has argued that Yenot Bitan will face the same antitrust obstacles as Rami Levy — the Antitrust Authority had warned that is was unlikely to approve its purchase of Mega because it is already Israel’s biggest discount supermarket chain. Ben-Moshe argued that if Yenot Bitan merged with Mega, the resultant company and No. 1 supermarket chain Super-Sol would jointly control nearly two-thirds of Israel’s retail food market.

Meanwhile, Ben-Moshe’s acquisition of Alon Blue Square moved forward yesterday after he submitted a new bailout proposal to the holding company’s creditors, Alon Blue Square said in a statement.

The new proposal, which was submitted to the court overseeing Alon Blue Square’s bailout late on Tuesday, would give Ben-Moshe full control of the holding company, rather than the 72.7% he had originally offered to buy. Minority shareholders would be diluted out of their stake and creditors wouldn’t get the 10% of the company they were due to get.

However, Ben-Moshe is committed to injecting 300 million shekels into the company.

Alon Blue Share shares plunged 66.7% to end at 41 agorot.