Tel Aviv stock exchange.
(photo credit: REUTERS)
Israeli food manufacturer Osem on Thursday announced to the Tel Aviv Stock Exchange that Nestle, its controlling stakeholder, wants to buy its remaining public shares and thus erase it from the exchange.
Nestle is offering to pay NIS 82.50 per share, a more than 25 percent premium on the market price. That would value the company at about NIS 9.13 billion, an impressive rise for a company valued at $178m. when it went public in 1992.
Osem will convene a general shareholders meeting on March 17 to consider Nestle’s bid.
Some retailers said the move would allow the company to raise prices in Israel, as it would insulate it from local pressures because it will not have to specifically disclose its earnings.
“Why should they be in the middle of the social-protest storm and be criticized all the time for how much they earn? Look at the Central Bottling Company [Coca Cola],” a senior retailer told Globes.
Only 36.32% of Osem’s shares are traded on the market, and it would continue to be an Israeli company, management said in a letter to its employees.
“We will continue to be a successful, innovative and leading company while ensuring all of our futures and protecting the unity we’ve had up until now,” Osem chairman Dan Propper wrote. The company said it would keep its factories in Israel.
The move would be a blow to the TASE, which has been trying to keep Israeli companies trading locally and attract outside companies as well. Osem is a part of the TA-25, one of the exchange’s benchmark indexes.
The possibility of going private began on October 26, 2015, when Osem’s board of directors discussed the possibility.
A special committee was set up to examine the option, and after three months it decided to approve the purchase of the public’s shares as fair and beneficial for Osem. The committee recommended that the board approve the measure.
Nestle has invested in Osem for more than 20 years and already owns 63.7% of it.
Osem is Israel’s third-largest food maker by sales, competing with market leader Tnuva and Strauss Group. In 2015, Osem held a 9.3% market share of Israel’s food sector in financial terms after a 0.4% rise in revenue, according to Storenext.
Consumers purchased NIS 3.17b. worth of Osem products last year.Reuters contributed to this report.