Paz is on its way to acquire Super Yoda at a value of NIS 140 million

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Paz is conducting advanced negotiations for the acquisition of the Tel Aviv supermarket chain Super Yoda. Calcalist has learned that the parties are close to signing a memorandum of intent. The value of Sofer Yoda in the deal is estimated at NIS 140-130 million, but has not yet been finally determined.

Read more in Calcalist:

Paz intends to transfer the 16 stores in the Tel Aviv chain to the yellow brand, and at the same time, Paz will strengthen it as part of the acquisition. In addition, Paz is trying to strengthen yellow’s bargaining power with its suppliers through the acquisition, in light of the relatively large turnover of the acquired chain. For Paz, this is an entry into the field of urban supermarkets, which is new to it and to the fuel companies in general.

Right: Paz CEO Nir Stern and owner of the Super Yoda chain, Yehuda Guetta. Advanced contacts Photos: Dana Kopel, Alex Kolmoisky

The Super Yoda chain, owned by Yehuda Guetta, operates 16 branches in Tel Aviv that operate around the clock even on weekends and holidays. The chain’s sales turnover is estimated at NIS 300 million per year. People close to the chain claim that in contrast to the contacts that have taken place in the past for its sale, this time it is a serious negotiation on the part of Guetta.

Paz, managed by Nir Stern, has been seeking to strengthen its retail and trading arm for more than a year. For more than a year, the company squinted over control of the largest retail company in the country – Shufersal. Both during Yona Fogel’s tenure as CEO of Paz, and after he left due to friction with Chairman Avraham Bigger, Paz tried to maintain contacts with Eduardo Elstein, the former controlling shareholder in Shufersal, in order to acquire DSK’s shares in the retail company.

The contacts were not successful at first due to price differences. But they were completely stopped after Bigger “kidnapped” CEO Nir Stern of Cellcom, which is also controlled by Elstein. Stern left Cellcom last December in favor of Paz. The fact that senior members of Elstein’s IDB group, including Elstein himself, were not kept secret And were exposed to Nir Stern’s move only following a news item on the Calcalist website, which left a dent in both Paz and Bigger and Stern, which influenced Elstein’s decision not to sell Shufersal shares to Paz.

As early as 2003, Bigger tried to lead a move in which Shufersal would acquire 50% of the newly established yellow chain, but these did not mature into a deal. Paz was also a partner in Shufersal Finance’s Shufersal credit card venture, holding 20% ​​of it before selling them to Shufersal two years ago, during a dispute between the parties.

Super Yoda is of course a much smaller purchase than Shufersal, but it may be the first swallow on the way to the acquisition of additional chains by Paz. The chain is the result of a split between two partners, Guetta and Yossi Reuveni, who owned Super Baba on Jeremiah Street in Tel Aviv.

The two got into a difficult and protracted dispute, which reached the court, and separated in 2013. Guetta has expanded the chain and currently has, as mentioned, 16 branches and also conducts online sales. As a chain of neighborhood supermarkets, where prices are more expensive than large branches in industrial areas, Super Yoda’s profitability rates are relatively high.

A year ago it was reported that the Victory chain was in talks to buy Super Yoda, but Guetta denied the talks. A month later, in July 2019, a stun grenade was thrown at the chain’s branch, and a week later another stun grenade was fired at another branch. A few months earlier, the chain had lost its branch in Ibn Gvirol, which was responsible for 10% of its sales, due to a dispute over rent.

Guetta denied the speculation surrounding the throwing of the grenades, claimed he had no personal debts, and added that no grenades were thrown at all but Purim explosives. Guetta emphasized at the time that the chain was not for sale and that most of his family members worked for it, but added that if someone came and offered NIS 250 million, he might sell.

Paz currently operates 268 gas stations throughout Israel and 241 convenience stores under the yellow brand. There are 239 such stores in the station complexes and only two are outside the complexes, so the chain is interested in expanding the number of stores that are not inside the refueling complexes.

Some of the yellow convenience stores are operated by Paz itself and the other stores are operated by third parties who pay Paz some of the revenue or a fixed monthly consideration.

The company sees yellow stores as the company’s growth engine and part of complementary activity in the refueling complexes. In its reports for 2019, Paz stated in the strategic plan that it “estimates that the yellow convenience stores have a cushion for growth, among other things compared to the activity of convenience stores in other countries abroad.”

Yellow’s revenues in 2019 amounted to NIS 943 million, so that Super Yoda, despite the small number of branches (16), should add almost a third to yellow’s revenue turnover. Yellow’s gross profit margin is about 30%.

Paz is a company without a controlling interest and is managed by the board of directors headed by Bigger. The company was controlled for 17 years by Tzadik Bino, who in 2016 sold the controlling shares in the company in light of the requirements of the Centralization Law. He sold the shares at a company value of NIS 5.8 billion, and since then the company’s share has been falling and is currently traded at only NIS 2.7 billion.

Until two weeks ago, Paz negotiated the sale of the Pazker company it owns to the listed company Inrom, but the negotiations were stopped due to the Corona crisis. Inrom sought to reduce the price, but Paz claimed that Inrom’s results improved during the crisis and there is no justification for a reduction in the price set at NIS 135 million. Unlike other industries in the economy, the retail sector was not affected by the corona crisis and the results of food sales even improved.

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