Carrefour Israel IPO May Spark Control Battle, Mirroring Past Deals

Carrefour Israel, the country's fourth-largest supermarket chain, has initiated its public offering process by submitting a draft prospectus to the Israel Securities Authority. The IPO, slated for November, will see its controlling shareholder, Electra Consumer Products, sell approximately half of its stake. This move is mandated by Israel's "Concentration Law," which requires Electra Consumer Products, controlled by the Zalkind brothers, to divest its controlling interest in Carrefour to avoid a third tier in its public company pyramid.

Market insiders suggest that the release of Carrefour's financial data through the IPO prospectus could attract interest from other retail players, potentially leading to a control struggle or the emergence of a dominant shareholder. The offering 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 additional capital expected to flow into the company. "This is a company with very great potential, whose growth has been limited until today due to a complex situation between shareholders," stated one market source. "I wouldn't be surprised if a large retailer tries to acquire control of the chain, which is at a 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, primarily Elco. The IPO is being managed by Ofer and Eyal Greenbaum, heads of underwriting firms IBI and Phoenix, respectively.

Carrefour Israel, which previously incurred significant losses, has been a burden on Electra Consumer Products, whose stock has fallen 40% year-to-date. The company, which acquired control of the Yeinot Bitan chain in 2021 and relaunched as Carrefour Israel after securing the French brand's franchise, currently operates about 140 branches. In the first half of the year, its revenue reached NIS 1.68 billion, with an operating profit of NIS 86 million. Inbal Harson, formerly of Coca-Cola Israel, recently took over as CEO.

Past IPOs have led to significant ownership changes. In 2015, the real estate company Economic Jerusalem (now Structure) raised capital through an IPO, leading to its eventual emergence without a controlling shareholder but with a dominant one. Similarly, the privatization of El Al Airlines in 2003 via an IPO resulted in Knafaim Holdings acquiring control the following year, a control that was later lost during the COVID-19 pandemic.