US private equity investment banking company the Blackstone Group L.P. is in talks to buy Israeli supermarket retail chain Mega from Alon Group, sources inform "Globes." The talks are being led by Dan Gillerman, the former Israel Ambassador to the UN, who is serving as Blackstone's representative.
Most of Blackstone's investments are in US retail and the group has no investments in Israel. "Globes" also understands that at a recent meeting in Blackstone's offices in the US, Gillerman was given the green light to pursue the Mega acquisition.
Gillerman has teamed up with Jacob Gelbard who has in the past served as CEO of Mega's parent company Blue Square Alon and of Bezeq, and if the deal goes ahead Gelbard will hold a minority stake of 10%. On Mega's side the talks are being managed by Along Group CEO Avigdor Kaplan.
The structure of the deal is still not clear and it is possible that Blackstone will partner with rather than buy Mega and inject capital in order to rehabilitate the chain.
Mega is Israel's second largest supermarket chain with 171 stores under the Mega Ba'ir, YOU, Zol Beshefa and Taclis branded outlets. It also holds a controlling 51% stake in organic foods chain Eden Teva Market.
In recent years, Mega's financial performance has consistently worsened. Sales fell 9.1% in 2014 to NIS 5.75 billion from NIS 6.32 billion in 2013. Gross profits last year fell 11.3% to NIS 1.42 billion, 24.7% of sales, compared with NIS 1.6 billion and 25.3% of sales in 2013. Mega made an operating loss of NIS 29.6 million last year compared with an operating profit of NIS 43.9 million in 2013.
Alon Group declined to comment on the report and Dan Gillerman and Jacob Gelbard were unavailable for comment.
Published by Globes [online], Israel business news - www.globes-online.com - on May 13, 2015
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