The FINANCIAL — Bank Leumi announced that it had signed a memorandum of understanding with M.B.S.T. Ltd., and Mivtach Shamir Holdings Ltd., to purchase all the indirect holdings of Mivtach in the Tnuva Group.
According to the memorandum, Bank Leumi will purchase a 13.5% stake of AP. MS. TN. Holdings Ltd., (“SPV”) reflecting some 10.36% of the Tnuva Group. In addition, the Bank will lead a consortium of investors to be gathered by Leumi Partners to purchase Mivtach’s remaining holdings of the SPV. The total number of shares purchased provide a 26.9333% stake in the SPV and an indirect holding of some 20.6665% of the Tnuva Group. The Bank will sell out of its own holdings, according to its undertaking to the Bank of Israel, 3.5% of the capital of the SPV within one year of completing the transaction.
The Bank and the additional purchasers will pay the seller on the completion date of the transaction, a cash price of approximately NIS 1,230 million, the precise amount to be fixed on the completion date according to the SPV’s financial debt on that date, subject to the adjustments set out in the memorandum of understanding.
The deal includes an agreed adjustment mechanism to be in force for four years after the completion date, which will be invoked in the event of a “sale event” occurring (which term is defined in the memorandum of understanding as an IPO of the Tnuva Group or transaction in which control of the Tnuva Group will be sold and transferred to a third party). Should such a sale event occur, the SPV value according to which the sale event was made will be examined compared to the SPV value fixed for the purpose of making the transaction under the memorandum of understanding. According to the formulae that are set in the memorandum of understanding, the purchasers will receive a cash refund if a negative difference arises between the value on the basis of which the sale event will be made and the value according to which the purchasers paid the price to Mivtach, while conversely, Mivtach will receive from the purchasers an addition to the cash price if a positive difference arises between the value forming the basis for the sale event and that value which was paid by the purchasers in the transaction. The adjustment mechanism is limited in such a way to ensure that the repayment to the purchasers will not exceed NIS 430 million and the additional price payable to the seller will be capped at some NIS 278 million.
The transaction ùnder the memorandum of understanding is subject to the signature of detailed agreements between the seller and the purchasers and fulfilment of the conditions precedent set out in the document, including receiving regulatory approvals, the making of investigations by the purchaser of the Tnuva Group and the SPV, receiving consents from the financing banks and the signature of a shareholders agreement between the purchasers and the APAX Funds.
Mr. Avi Seldman, the CEO of Leumi Partners and Mr. Yaron Bloc, the Deputy CEO of Leumi Partners and Leumi Partners’ Legal Advisor, Advocate Michal Rabinowitz, assisted by Advocate Dalia Tal and Dana Yagur of the Kantor-Elchanani-Tal & Co. Law Office are responsible for formulating the transaction on behalf of the Bank.
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