Carrefour Israel IPO Could Spark Control Battle, Mirroring Past Deals

Carrefour Israel, the country's fourth-largest supermarket chain, has officially begun its initial public offering (IPO) process, with its parent company, "France Israel Group," submitting a draft prospectus to the Israel Securities Authority last week. The IPO is slated for November and will see the controlling shareholder, Electra Consumer Products (holding 49.5%), divest approximately half of its stake through a public offering.

This move is necessitated by Israel's "Concentration Law," which requires Electra Consumer Products, controlled by the Zalkind brothers, to relinquish control of Carrefour to avoid a third tier in their public company pyramid. Market insiders suggest that the public release of Carrefour's financial data could attract interest from other retail players, potentially leading to a control struggle or the emergence of a dominant shareholder.

The IPO aims to raise between NIS 250-300 million, valuing the company at around NIS 800 million. Electra Consumer Products plans to sell at least 25% of its shares, with new capital also flowing into the company. "This is a company with very great potential, whose growth has been limited until today due to a complex shareholder situation," noted a market participant. "I wouldn't be surprised if a major retailer tries to acquire control of the chain at its starting point."

A more probable scenario involves institutional investors acquiring the shares offered by Electra Consumer Products. Alternatively, Electra Consumer Products could distribute its Carrefour shares as a dividend in kind to its own shareholders. The IPO is being managed by Ofer and Eyal Greenbaum, leading the underwriting firms of IBI and Phoenix, respectively.

Carrefour Israel, which was established on the foundation of the "Wineworld" chain acquired by Electra Consumer Products in 2021 and relaunched under the Carrefour franchise two years later, has become the fourth-largest chain by revenue. In the first half of this year, revenue reached NIS 1.68 billion, a 2% increase, with operations across approximately 140 branches. The chain reported a sector operating profit of NIS 86 million for the first half, consistent with the previous year. Inbal Harson, formerly the trade CEO of Coca-Cola Israel, recently took over as CEO of Carrefour Israel.

Past IPOs have led to significant ownership changes, such as the 2015 IPO of "Economic Jerusalem" (now Mivne Group), which helped the real estate company overcome financial distress and become a company without a controlling shareholder but with a dominant one. Similarly, the privatization of El Al Airlines in 2003 through an IPO led to its takeover by Knafaim Holdings within a year, though Knafaim later lost control during the COVID-19 pandemic.