Antitrust Authorities Nix Sale of Hanson to IDB Group Company

Antitrust commissioner Ronit Kan will not approve the sale of building materials firm Hanson Israel to IDB group company Mashab, sources told TheMarker. Indications to this effect have been relayed in recent weeks to Mashab, which has begun exploring ways to get the NIS 450 million sale by Germany's HeidelbergCement through the Antitrust Authority.

Alternatives under consideration include acquiring only part of Hanson. The Antitrust Authority may have already rejected several options proposed by Mashab. Observers say the authority would accept a greatly scaled-down deal, if such approval were forthcoming at all, but not the whole transaction.

"The transaction in its entirety is being examined by the antitrust commissioner, and we are waiting for her official response," Mashab said. The Antitrust Authority says that "contacts with the parties are continuing," adding that Mashab's acquisition by Hanson is "highly problematic ... but there is no final decision on the matter."

Hanson specializes in concrete and quarrying, while Mashab owns Nesher, which has been declared a monopoly in Israel in cement production. In addition, the Livnat family, which is a partner in the group that controls IDB, controls interests in related industries including cargo handling for infrastructure companies.

Mashab depicts the deal as a vertical merger in the infrastructure sector, one that would not harm competition. But concerns abound that the transaction would reduce competition in the concrete and infrastructure industries. If Mashab disagrees with the Antitrust Authority's decision, it is expected to appeal to the Antitrust Tribunal.

The sale of Hanson Israel to Mashab was inked at the end of July after Hanson's German parent company, HeidelbergCement, considered bids by several suitors. The process included meetings with representatives of the Shapira family's Shapir Engineering, and with businessmen Ya'akov Shahar and Yaakov Engel. All were ready to buy Hanson, which is considered Israel's second largest building materials firm.

Hanson's assets include three quarries, 29 concrete plants, two asphalt factories and a fleet of 170 trucks, including cement mixers and trucks that transport materials from the quarries. According to Shaul Kroland of Shaked Economics, Hanson Israel, which employs 560 people, has an annual turnover of NIS 950 million.

Among IDB's holdings are the Nesher cement monopoly and Haroshet Explosive Materials Industries, which has been declared a monopoly in the quarry explosives industry. In addition, the Livnat family owns Taavura, which has monopoly status in the cement haulage industry and takes part in bulk hauling and truck imports. The IDB group's Gav Yam and Naveh Gad, meanwhile, have construction activities.

Opponents of the Hanson sale to Mashab, most notably the Association of Contractors and Builders, say it will harm competition in the construction sector, especially the concrete industry, as it would give one party a hold on the entire building process from cement and concrete production to on-site construction. IDB officials argue that the group is not active in the concrete or quarry industries so the purchase of Hanson would not reduce competition.

The Knesset Economic Affairs Committee recently discussed the deal at the request of MK Haim Oron (Meretz), who has opposed the transaction. Two weeks ago, TheMarker revealed that the Finance Ministry is it against, too.