July 29, 2019

The Salkind Brothers Purchase Supergas

Yediyoth Aharonot – 07/29/19

TheSalkind Brothers Purchase Supergas

Elcopurchases the gas distribution company for NIS 750 million from the AzrieliGroup which will record a profit of about NIS 355 million.


By Nevit Sommer

The Azrieli Group is selling Supergasto Elco controlled by the Salkind brothers according to an activity value of overone billion NIS. The expected profit from the transaction is NIS 355 million.This is an additional step in in the implementation of Azrieli Group's strategyto focus on real estate, its core business.

Azrieli announced yesterday thatit had signed an agreement to sell its entire stake in Granite Carmel to Elcofor a consideration of NIS 750 million, after deducting Granite's debt of NIS250 million. Granite owns Supergas. The transaction will be made in 7 installmentsover 7 years.

Supergas is the country's leadinggas distribution and marketing company. The company specializes in the design,construction and marketing of gas systems for customers in all sectors: domestic,agricultural, commercial and industrial; it serves about half a millioncustomers and is the exclusive gas supplier to the security forces, the IDF, thepolice and the IPS.

Supergas is the last remnant ofAzrieli’s Granite Carmel's adventure: In 2006, at the time of the late DavidAzrieli and led by Menachem Einan, the group acquired control of Granite Carmelfor NIS 700 million from the Borovich-Mozes Group. Granite Carmel's mainholdings, besides Sonol, were Tambour and Supergas.  Sonol made no current profits, and in August2014 it was sold to Dudi Vaisman for NIS 450 million.  Tambour was sold to a foreign investment fundfor NIS 500 million, and Supergas is sold now.

Supergas completed the firstquarter of 2019 with revenues of NIS 188 million and a net profit of NIS 30million.  This constitutes a decreasecompared to revenues of NIS 572 million and a profit of NIS 61 million in thefourth quarter of 2018, and revenues of NIS 556 million and a net profit of NIS66 million in the fourth quarter of 2017. Completion of the transaction issubject to regulatory approvals and is expected to take place on October 31,2019.

Eyal Hankin, CEO of AzrieliGroup: "The sale of Supergas is a successful deal for us in two aspects:the excellent value that is largely due to the improvement we have made overthe years in Supergas, the growth in its operations and the continued implementationof our strategy, which is mainly focused on the core activity in yielding realestate." Hankin noted that "just a few days ago we announced aninvestment in a global Data Center company, an area that is at the core of ouryielding real estate activity, with attractive returns and tremendous growthpotential."

The new owners of Supergas arethe Salkind brothers, the heirs of Gershon Salkind, who own three public companies- Electra Consumer Products, Electra Ltd., which is engaged in the constructionof elevators, and Electra Real Estate. The parent company is Elco, throughwhich the deal was executed, although, if there is synergy between the Salkindbrothers’ business, it is through Electra Consumer Products, an airconditioning systems manufacturer, or Electra, which installs elevators andelectrical infrastructure.

The last purchase made by the Salkindbrothers took place two years ago, when they purchased the Globus movie theaterchain from the Official Receiver for NIS 144 million.

Elco was represented by NaschitzBrandes Amir, and the Azrieli Group was represented by Barnea Jaffa Lande &Co.