The NIS 40 million (about $10 million) deal includes five Gap stores operated by the company in Israel, purchased for about NIS 26 million ($6.5 million), and another NIS 14 million ($3.5 million) paid for the stock.
Zara Israel is a franchisee of Spanish Inditex and operates the Zara, Pull & Bear, Bershka and Massimo Dutti brands in Israel.
In an interview to Calcalist, Elbit Trade and Retail CEO Yaron Carmon said his company "invested in the Gap brand, predominantly by opening five stores at an average cost of NIS 20 million ($5.2 million), and the deal's value is NIS 40 million."
Carmon was brought to Elbit Trade and Retail to reorganize the company.
The deal is expected to be finalized by February 2012 and is subject to the approval of the Antitrust Commissioner and the conclusion of several suspending conditions for the finalization of the agreement.
Elbit Imaging will continue to hold and operate the retail activity of the Israel franchise of the Spanish fashion brand Mango, which has 25 stores. It should be noted that the company posted markedly improved results over the past months.
Gap and Mango have been on the market since 2010, but negotiations with Israeli fashion chain Castro, Gaon Holdings, Hamashbir Lazarchan department store chain and others fell through.
Carmon said that the sale stemmed from the company's decision not to invest further resources in the brand.
"With the five stores, I can make sure Gap Israel breaks even in 2012; however, leading it to profitability will require considerable equity capital investments which Elbit does not wish to make at this stage."
Elbit Imaging's retail division is still in the red. In 2010 the company lost NIS 22 million ($5.7 million), said Carmon. "In 2012 it will break even and losses will be cut."
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