Koor Industries Ltd. (TASE:KOR) said this morning that it has been approached by a Chinese agro-chemicals company regarding a transaction that will turn Koor holding Makhteshim Agan Industries Ltd. (TASE: MAIN) into a private company.
China National Chemical Corporation (ChemChina) and Koor reached a tentative understanding on a deal under which ChemChina will buy all the public's shares in Makhteshim, and ChemChina will also buy 17% of Makhteshim from its parent company Koor. The result will be that ChemChina will own 70% of Makhteshim, and IDB Holding Corp. Ltd. (TASE:IDBH) subsidiary Koor will own 30%. Makhteshim will be a private company, controlled by ChemChina.
The transaction will effectively value Makhteshim at approximately $2.72 billion (not including shares held by Koor itself), a 60% premium above the market value.
At the same time, Makhteshim also reported a profit warning for the its third quarter results. The company said that while revenue will be about twenty percent higher than than the corresponding quarter of 2009, it also sees a net loss that will be significantly higher than the corresponding quarter. The company said that the higher net loss is due to one-time expenses, higher financing costs, and tax expenses. The company did not provide specific figures.
Makhteshim also said that its board authorized a wide-ranging reorganization plan at the company's Brazilian subsidiary. One-time costs associated with the plan are expected to be about $30-40 million. Most of the costs will be recorded in the fourth quarter. The company expects the reorganization to save about $30 million in production costs.
The deal with ChemChina will also give Koor a put option to sell its remaining shares in Makhteshim to ChemChina at the same company value, with an additon of 20% each year, for a specific amount of time.
Koor noted that the deal is not finalized yet.
Makhteshim is controlled by Nochi Dankner's IDB Holding Corp. Ltd. (TASE:IDBH) unit Koor.
Makhteshim shares were up over 26% in early afternoon trading.
Published by Globes [online], Israel business news - www.globes-online.com - on October 11, 2010
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