Business in Brief: Electra Consumer Files Breach of Contract Suit Against China’s Huawei

Adika's IPO does better than Rani Zim’s; Keshet fund seeks institutional investors; Insurers send stocks higher

People enter a Huawei Technologies store in Beijing, March 7, 2018.
Qilai Shen / Bloomberg

Electra Consumer Products said Tuesday it had filed an 80-million-shekel ($23 million) lawsuit in Israel against Huawei Technologies, saying the Chinese company breached a contract to import smartphones to Israeli customers. The move came a month after Electra was informed by Huawei that it had not met the 60-million-shekel target for buying Huawei smartphones in 2017 for distribution in Israel. The target was a condition for extending Electra’s distribution agreement into this year, but Electra says Huawei made “a fundamental breach of the cooperation and distribution agreement.” Electra alleges that Huawei used the missed target as an excuse to enforce a global strategy of ending exclusive-distribution agreements. In the meantime, Electra said it was taking a 25-million-shekel charge against goodwill for the fourth quarter of 2017. Reuters reported that officials at Huawei were not immediately reachable for comment. Electra shares ended down 1% at 51.01 shekels. (Eran Azran)

Adika IPO deluged with orders while Rani Zim’s draws tepid demand
Adika, the online apparel retailer controlled by Golf, drew big demand for its initial public offering on the Tel Aviv Stock Exchange late Monday. The institutional tranche of the IPO raised 37 million shekels ($10.8 million) after orders totaling 69 million shekels were placed. The IPO assigned Adika a valuation of 167 million shekels, or 9 shekels a share, versus a minimum set in the prospectus for 151 million. Meanwhile, Rani Zim Shopping Centers’ IPO for shares and warrants Tuesday elicited tepid demand. The mall developer drew just 53 million shekels in orders in its institutional tranche for 48 million shekels worth of securities on offer, or 2.35 shekels a share, while a parallel bond issue was pulled. The IPO valued Rani Zim at just 200 million shekels, a third less than it had planned on and less than its 240 million shekels shareholders’ equity. (Eran Azran)

Keshet fund seeks institutional investors to fund global TV productions
Israeli institutional investors will soon have the chance to bet on the continued success of the country’s television producers to come up with more international hits like “Fauda.” Keshet International, the global production arm to the Israeli broadcaster, said Tuesday it had formed a $55 million fund with Altshuler Shaham Group, Halman Aldubi, insurance company Phoenix and Arxcis. The fund will join Keshet’s production assets with investors’ capital to meet growing world demand for TV content as more and more outlets offer programming like Netflix and Amazon Video. The Keshet fund isn’t the only one on the Tel Aviv Stock Exchange pursuing the global TV market. Last week Taya Investment sold 48 million shekels ($14 million) in bonds whose proceeds will be used to buy overseas production companies. In addition, Vonetize, which provides digital video content via the internet, smart devices and television sets, said last week a Hollywood studio was interested in buying control. (Guy Erez)

Tel Aviv shares rise, paced by insurers
Tel Aviv shares ended higher Tuesday even though a mid-afternoon move higher quickly lost momentum. The benchmark TA-35 index finished 0.55% higher at 1,502.02 points, while the TA-125 rose 0.7% to 1,361.85, on turnover of 1.23 billion shekels ($360 million). Insurance shares rose strongly, with Clal climbing 3% to 63.53 shekels and Phoenix adding 2.4% to 20.42. Migdal gained 2.8% to 3.80 after the insurer announced that Doron Sapir had been named CEO to replace Izzy Cohen. Other big gainers included Frutarom, which advanced 3.2% to 317.80 and Housing & Construction, which jumped 4.3% to 6.35. Bank Leumi rose for the sixth straight session, adding 1% to end at 22.42. Biomed was the only sector to end lower, with Mazor Robotics shedding 1.8% to close at 126.30. In forex trading, the dollar and euro both strengthened, with the greenback gaining 0.1% to a representative rate of 3.440 and the euro strengthening 0.5% to 4.2507. (Guy Erez)