Kadima Fund Offers to Buy Aberbach for $50 Million, Doubling Share Price

Kadima Fund 2 has submitted a non-binding offer to acquire Aberbach Formica Center, a company specializing in wood products, laminates, and flooring, with the intention of delisting it from the stock exchange. The proposed acquisition is valued at approximately NIS 190 million (around $50 million USD), translating to NIS 27 per share. This offer represents a significant premium of about 133% compared to Aberbach's closing share price of NIS 11.61 on September 10th, and a premium of roughly 94% over its market capitalization of NIS 97.8 million at that time.

The offer, initially received on July 13th, is contingent upon due diligence, a detailed agreement, and necessary approvals. Aberbach's board of directors has approved proceeding with negotiations and granted Kadima an exclusive 90-day period for its review and discussions. The company delayed the public announcement of the offer until regulatory conditions were met.

The substantial premium is reportedly driven by Aberbach's real estate holdings, which are valued significantly higher than their book value. Kadima, which owns adjacent property, likely has plans for real estate development. The proposed transaction structure involves a reverse triangular merger, leading to Aberbach's delisting from the Tel Aviv Stock Exchange.

The NIS 190 million represents the total consideration for the shares included in the deal, not capital raised for Aberbach's operations. The NIS 27 per share price is subject to potential adjustments related to capital and dividends. While the offer highlights a significant gap between the fund's valuation and the stock market price, it does not guarantee the deal's completion. Negotiations can still falter, and the price may change before a binding agreement is reached. Aberbach emphasizes that there is no certainty the negotiations will result in a binding deal or that the transaction will be finalized.