April 29--As Apax Partners Israel CEO Zehavit Cohen makes progress in the sale of its controlling stake in Tnuva Food Industries Ltd. to China'sBright Food Group Ltd., some minority shareholders have come out against the sale. They are kibbutzim which own 5.2% of Tnuva, and want tag-along rights in the deal, should it be closed, otherwise they will take legal action.
Cohen flew to China last week to try and close the deal within the next few days, reportedly at a company value of NIS 8.5-9 billion for Tnuva. Apax owns 56% of Tnuva, which it acquired in early 2008.
Mishkei Hamifratz Central Agricultural Cooperative Ltd. and Jordan Valley Central Agricultural Cooperative Society sent a letter to Tnuva, in which they stated that no deal had been reached in the negotiations in recent months with Apax, and that in view of the reports about Apax's talks to sell its stake in Tnuva to Bright Food, they want tag-along rights. They are therefore demanding information from the company
Mishkei Hamifratz CEO On Barzilai told "Globes", "We are worried that if we're left alone in Tnuva with the Chinese, we will be weak in terms of our holding, nor will we see dividends and we'll be in the front line of local pressure during hard times at the company. We also think that it is important for Tnuva to be floated on the Tel Aviv Stock Exchange (TASE) -- for the company, for the investors, and for the TASE."
Some people in the kibbutzim say that the sale of control in Tnuva to Bright Food is a mistake, and that an IPO on the TASE is preferable, both for the country and for Tnuva's shareholders. A party involved in the matter said that the shareholders are worried that without tag-along rights to Apax's deal with Bright Food, they are liable to be stuck with Tnuva shares for years without the ability to sell them.
A source involved in the deal said that notwithstanding the minority shareholders' demands, Tnuva was pressing ahead with its negotiations with Bright Food on one hand, while working on an IPO on the other hand.
The kibbutzim and moshavim own 23% of Tnuva, and are not part of its controlling core with Apax; that role is held by Mivtach Shamir Holdings Ltd. (TASE:MISH), which owns 21% of the company. It has tag-along rights to Apax's deal.
Sources close to Mivtach Shamir chairman Meir Shamir say that he has not yet decided whether to join the Apax deal with Bright Food, or to keep the stake in Tnuva. "Mivtach Shamir is waiting for Zehavit, to see what she will say and what will happen," says a market source. Sources believe, however, that Meir Shamir is leaning toward keeping the Tnuva stake.
Apax is not only under pressure from the kibbutzim. "Zehavit Cohen faces a dilemma," says a source close to Tnuva's shareholders. "She must not miss the IPO deadline, so she cannot drag out the negotiations with Bright Food much longer without a decision. Otherwise, she'll have fewer options in hand. If she doesn't reach a deal with Bright Food by May, she's liable to lose the IPO, in which case her leverage with Bright Food might weaken."
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