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David Azrieli Photo: Ofer Amram
David Azrieli Photo: Ofer Amram
 
 

Azrieli's Granit on market for NIS 400M

Several business entities holding initial talks for acquisition of Granit Hacarmel but deterred by price tag, which is more than double company's market cap. Meanwhile, Azrieli negotiating sale of Sonol gas station chain for $200 million. Potential buyer: Haredi consortium that will shut down stations on Shabbat

Golan Hazani, Calcalist
Published: 10.05.11, 14:58 / Israel Business

Businessman David Azrieli is putting Granit Hacarmel and Sonol gas station company up for sale.

 

Calcalist has learned that two business entities are examining the acquisition of the Granit Group, one of which is already in the due diligence phase, but not yet negotiating for the acquisition of the company.

 

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Azrieli set a price tag that is putting off potential buyers – the owner of the Group's controlling interest (60.7%) is asking for NIS 940 million ($251 million) for his shares, on a company valuation of $400 million – twice its market cap which is NIS 770 million ($205 million).

 

At the same time, preliminary negotiations are underway for an alternative deal whereby Azrieli would sell Granit's main holding – Sonol gas station company for $200 million.

 

Sonol's sale is attracting more potential buyers and so far, three business entities are looking into the acquisition, among them an ultraorthodox investor group which if it does acquire Sonol, will shut down the gas stations on Saturdays, thereby drawing a substantial stake of the religious market.

 

Among the potential buyers are Yeshayahu Landau, who already owns 14% of the company, and Shlomo Shmeltzer, who lost the bid against Azrieli for the acquisition of the company five years ago.

 

Azrieli acquired Granit's controlling interest from the Borowitz family in 2006 after a well publicized tender in which the Antitrust Commissioner did not approve the sale of Sonol to Dudi Weisman and Dor Alon.

 

Through subsidiary Canit Hashalom, Azrieli acquired Granit shares for NIS 740 million ($197 million) which are presently worth NIS some 470 million ($125 million), thus Azrieli lost some NIS 270 million ($72 million) – nearly 30% of his investment (not including a NIS 25 million ($6.5 million) dividend distribution after the acquisition).

 

The decision to sell Granit Hacarmel was made following Azrieli's successful offering last year which seemed to further stress the fact that Granit is somewhat of a black sheep in the Azrieli Group and is incompatible with the Group's core business; Granit's value is lower than the value of the Azrieli shopping and business complex in Tel-Aviv alone and its activity is not synergetic to that of the group yet it requires considerable management resources.

 

Granit, managed by Yossi Singer, ended the first half of 2011 with a net profit of NIS 41 million ($11 million) – a 55% climb measured against the same period the previous year.

 

Nonetheless, even the profit increase is not enough to fulfill the high hopes Azrieli pinned on the investment; both the company's desalination activities and its gas station chain failed to expand as hoped.

 

Sources looking into the acquisition of Granit are interested mainly in its gas station subsidiary Sonol (which might be sold separately), the third largest gas station chain in Israel with a 20% market stake, operating 191 gas stations and 164 convenient stores called So-Good.

 

The company employees 1,900 workers and posted a NIS 26 million ($7 million) net profit on the first half of 2011 as oppose to only NIS 6 million ($1.6 million) in the same period the previous year.

 

Click here to read this report in Hebrew

 

 

 

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