Consortium Bidding for Mega Loses Key Member

Offer in trouble as candidate to join the group declines.

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A Mega supermarket.
A Mega supermarket.Credit: Ofer Vaknin

The consortium of small supermarket chains bidding to buy the food retailer Mega looked in danger of collapse after the biggest member of the group dropped out and a chain the group hoped to recruit in its place declined to join.

Machsanei Lahav said on Thursday that it was quitting the group of 13 grocery chains, saying it was dissatisfied with the terms of the offer. “In the last day we were given the paperwork connected with the structure of the group. After giving it some thought, we decided the proposed framework was not the way to go into the auction,” said CEO Ido Mor.

In the meantime, another supermarket chain, Yenot Bitan, turned down an offer to join the group, even after the Antitrust Authority reversed its earlier opposition to its joining. Nevertheless, Yishai Avidan, who is leading the group, said he still hoped to present a formal offer next week.

“After Yenot Bitan refused to join the group we are dividing the 17 stores Machsanei Lahav was supposed to get between the other chains in the group,” Avidan said. “We told the trustees and on Sunday we will give them a check.”

The group, which counts 12 food retailers including the Victory and Yohananoff chains, is one of three bidding to buy most or all of the 127 stores belonging to the Mega chain. Once Israel’s No. 2 supermarket chain, Mega is being sold by trustees after it received court protection from creditors in January. The other bidders are the discount supermarket chain Rami Levy and Bikurey Hasade – Israel’s largest fresh produce wholesaler.

The loss of Machsanei Lahav is a serious blow to the grocery consortium, which lost its original leader, former Economy Minster Shalom Simhon last week. Machsenei Lahav was supposed to put 50 million shekels ($13 million) of the 160 million the group was bidding for financially troubled Mega and take 17 of the 90 stores the group was offering to buy.

The deadline for submitting bid was March 11, but the trustees have been flexible about receiving new and late offers up until they begin examining the bids at the start of next week. Moti Ben-Moshe, who has acquired control of Mega’s parent company, Alon Blue Square, is weighing a bid for the food retailer, too.