Aaron Frenkel reports plans to buy control of Shufersal

“Shufersal is the first company in the country in the field of retail marketing and other products, and I love to take first place in every field. This is a company that has the potential to grow, expand and optimize,” says Israeli billionaire Aaron Frenkel, speaking in the first about the negotiations he intends to have with shareholders for a 20% stake in Israel’s largest retail chain.

Six institutional investors now own 60% of Shufersal Ltd. (TASE:SAE), which trades with a market capitalization of NIS 6.4 billion, and Frenkel says he wants to acquire a third of their holdings. Some of the institutional investors have reportedly expressed an interest in selling shares, although at least one of the major shareholders maintains that his initial offer was too low and that they would not sell at that price.

Frenkel, who lives in Monaco, arrived in Israel at the end of last week to be able to vote in the parliamentary elections and also to meet institutional investors who have a stake in Shufersal. He emphasizes that the issues are now at an early stage and that “nothing has been agreed”. He adds that over the past few years, he has been approached several times about a possible investment in Shufersal, “from all quarters, including existing shareholders. I received several phone calls about the matter.”

Shufersal is managed without a ruling core, and over the past year there has been a power struggle between the company’s top managers, which led to the resignation of former CEO Itzik Abercohen, who subsequently returned as chairman and is considered the most powerful man in the company. a company that has a final count. Since the beginning of 2022, Shufersal’s share price has fallen by 5%, along with a sharp drop in profitability. Along with intensifying competition in the Israeli retail market, the chain has been forced to implement an aggressive optimization plan.

Frenkel does not hide his plans to become the main shareholder of the company. “Managers need the support of an owner who understands the needs of the business,” he says, “Someone who can push it forward into bigger things.”

He also makes it clear that he has no plans to get involved in the management of the chain and is not bothered by the possibility of consumer protests developing against Israeli market chains due to the rising cost of living.

“The complaints against the chains due to the cost of living should be more balanced. There are manufacturers, importers and marketers. I believe that the best way to maintain an appropriate price level is simply to open everything up to competition. Competition is the one that can establish a fair and decent price for everyone. Let them open up to imports and let everyone do what they want, the better.”

What is your impression of the chain’s chairman Itzik Abercohen?

“Abercohen seems to be a methodical man who knows his job and it seems to me that he runs the company with vigor.”

There are rumors that he is the reason you are interested in investing in Shufersal?

“I don’t even know how to spell his name.”

Frenkel’s interest in Shufersal, which is undergoing a rationalization process to provide more value, has raised eyebrows after he previously made huge profits from two quick deals on the Tel Aviv Stock Exchange (TASE).

A few months ago, Frenkel sold his entire holding (37.22%) in the income generating company Bayside Land Corp. Ltd. (Giv Yam) (TASE:BYSD1) to Property and Building Corp. Ltd. (TASE:PTBL) for about NIS 3 billion in cash. This is after taking advantage two years earlier of a tens of percent fall in Bayside’s share price due to concerns about the consequences of the Covid crisis on its business (mainly office buildings). He started buying shares in the company in such a way that he later became a candidate for control of it. This deal brought Frenkel an incredible profit of about 1.25 billion NIS and about a 100% return on the capital he invested in Bayside. The person who made the Bayside transaction is Ilan Geifman, the former CEO of Aspen, who handles all of Frenkel’s real estate transactions and his dealings with Shufersal.

Frenkel previously profited in August 2019 from the sale of his stake in Yavne-based aircraft manufacturer Aeronautics, which was sold to Rafael Advanced Defense Systems and Avichai Stolero. In December 2018, Frenkel had started buying shares in Aeronautics as the company was in crisis due to the deteriorating performance and defense sales it had encountered. Frenkel built a 32% stake in an investment of 170 million NIS, and the sale to Rafael and Stolero reportedly netted him a profit of 85 million ISK.

Frenkel claims that in both cases – Bayside and Aeronautics – he intended to become the controlling shareholder, but the other shareholders made offers that were hard to refuse, so he agreed to sell. In any case, regarding Shufersal, he insists that he intends to develop the chain’s main growth engines: “There are a few more ideas beyond the usual retail,” he says. “For example, in the field of financing. There are also interesting properties and the possibility of developing into institutional marketing – for hotels and restaurants.”

Published by Globes, Israel Business News – en.globes.co.il – November 3, 2022.

© Copyright Globes Publisher Itonut (1983) Ltd., 2022.

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