Shares in Mivtach Shamir Holdings traded in Tel Aviv yesterday for the first time since May 2010, but investors were mightily distracted by a valuation war over Tnuva, one of Mivtach's flagship holdings.
Apax Partners owns a 56% stake in Tnuva, Israel's biggest food and dairy maker, and Mivtach owns just over 20%. Apax has provided a high valuation for Tnuva - which would stand the private equity firm in good stead if it is forced by legislative changes to sell its stake in the firm. (It may have to choose to keep either Psagot, a finance company, or Tnuva, a non-finance company. )
On Monday, Mivtach Shamir released restated annual and quarterly reports going back to March 2008, paving the way for it to return to the TASE trading floor.
The Israel Securities Authority had tossed it off the market because Mivtach Shamir owned a material 20.7% stake in Tnuva, but didn't divulge the company's financials as the rules require. It wasn't that Mivtach Shamir didn't want to comply: Apax Partners refused to reveal the figures, but finally capitulated to the pressure and reversed five months ago.
In its financial reports, Mivtach Shamir values Tnuva at NIS 5 billion based on an appraisal by financial advisory firm Giza Singer Even. The valuation, reflecting a 32% drop since the end of June and 47% since the end of 2010, highlights the damage done by Israel's "cottage cheese" protest and subsequent price reductions for dairy products.
Giza, however, wasn't the only firm offering an appraisal. Apax provided a NIS 8.7 billion valuation, 75% higher than Giza's, but Mivtach Shamir dismissed it.
The Apax appraisal is based on Tnuva having a NIS 7.9 billion operational value according to a 9.2 multiple on 2011 Ebitda of NIS 865 million.
In contrast, Giza based its assessment on Tnuva posting 2011 Ebitda of NIS 785 million.
Apax Partners might have to sell its Tnuva stake to Mivtach Shamir and the kibbutzim and moshavim that own the remaining 23% stake. It might have to in order to comply with the concentration committee's rules on cross-ownership of financial and non-financial institutions.
The valuation reflects 2011 sales of around NIS 7.64 billion by Tnuva. This exceeds the NIS 7.5 billion set by the concentration committee, meaning Apax would be forced to choose between selling its stake in Tnuva or Psagot Investment House.