Undertsanding The Willi-Food Sale
Written by: Aaron Katsman | June 25, 2007
By Aaron Katsman
www.IsraelNewsletter.com
I have gotten a ton of emails and phone calls asking for an explanation of the controlling shareholders’ selling 45% of their holding in G. Willi-Food parent company to Arcadi Gaydamak. The deal was at a 70% premium to the previous close of the stock on Tel Aviv trading. What is interesting to note is the Israeli investing public’s skepticism as to whether this deal will go through. The stock has moved up 23% since the announcement, a far cry from the 70% premium. The reason is that Gaydamak has been on a shopping spree, buying up one publicly traded company after an another. But last week, after announcing the acquisition of another food company Tiv Taam, also with a similar huge premium, the deal quickly broke apart and the stock which had jumped, dropped back just as fast. Keep in mind that WILC which trades in the US is a subsidiary and that is why it has not made the same strong upwards move, though it has been moving up nicely for a long time.
The deal, if it is completed, should be a big help to WILC. Gaydamak, the Russian billionaire, has extensive contacts in the food business in Russia and throughout Africa, opening new markets for G. Willi to sell. This goes along with our view that the Kosher food business has turned into a very attractive market. This move keeps with our opinion that WILC is a very interesting long term play in the kosher food business.
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Disclosure: Author’s fund is long WILC as of 6/25/07.
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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
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