Choking on Nasty Chicken

Could the great Tiv Taam chain really be worth just $40 million?

With Rotem Starkman

Three years ago Yoram Dar, then the chief executive of Blue Square Israel (NYSE, TASE: BSI), sat next to Kobi Tribish at a conference on retailing. Tribish, hugely proud of his chain's success, sniggered at the comparison Dar drew between Tiv Taam and Greenberg, which was collapsing under a mountain of debt.

"The big chains don't get it," Tribish gibed. "They forgot that the consumer is looking for a shopping experience. They don't know the million immigrants from the Soviet states who are looking for a home. They don't open on Shabbat. Generally speaking, they're going in the wrong direction."

The mood was loving and Tiv Taam was en route to the top of the world. The supermarkets chain, which features a wide range of non-kosher foods, glittered.

Everybody knows what happened to Greenberg. Today the chain is owned by Nochi Dankner and his supermarket giant Super-Sol (TASE: SAE), which also ate Clubmarket. Now it appears that Tiv Taam's fate is not much different.

All Tiv Taam is worth is $20 million. That's $40 million, after the money, according to the deal Tribish is closing with Amit Berger. Looming Tiv Taam, which had threatened the huge supermarket chains, burgeoning Tiv Taam, which had racked up sales of a billion shekels a year, is worth about the same as one single Super-Sol Deal discount outlet.

This week TheMarker reported that the new urban chain of groceries, AM-PM, is planning to float. At what value? $35 million, well above what Tribish is apparently prepared to accept for his baby.

Tribish is a wiz at marketing and retail. He is an entrepreneur in his soul, a dreamer, a man who reinvents the wheel time and again. Once he promised to build a branch that sported a roller coaster and Ferris wheel. If he had the money, he'd have hung the moon in a branch to provide light.

But dreams don't manage business.

Tiv Taam's rapid expansion was achieved through its own equity, and huge loans. To open that many glittering branches takes money and to bring in new buyers takes advertising.

For more than two years Tribish has been looking for a financial partner to smooth his relations with his bankers. But nobody came. His price was too high, said market sources, and his terms weren't great either.

The Kolbotek expose of three Tiv Taam branches pitching foul fowl as "spicy nuggets" may have broken even Tribish. Buyers voted with their feet; the bankers (still smarting over Clubmarket's sudden implosion) were turning nasty; suppliers were clucking, and Tribish had no choice but to lower his sights and lose some of his controlling interest.

And he found Amit Berger, ravenous for a new deal after a series of embarrassing deals that didn't come off. It remains to be seen if this is the deal he gets done.