Akarstein Sells US Operations for $24 Million Amid Losses

Akarstein, an Israeli construction and infrastructure solutions company, has signed a binding term sheet to sell its US subsidiary, Akarston, for approximately 90 million shekels (about $24 million). The buyer is described as a leading US company in environmental development solutions and interlocking stones. This sale is expected to halt an annual operational loss of around 16 million shekels previously incurred by the US operations and will also generate a profit from the divestment itself.

Akarstein Group, controlled by the Akarstein family, is involved in manufacturing and developing construction and infrastructure solutions, as well as income-producing real estate. The US buyer is also noted as a major player in the Canadian and American concrete and interlocking stone market. The company's North American activities began in 1989, with production facilities in California and Arizona. In recent years, these facilities have consistently resulted in an average annual operating loss of about 16 million shekels.

The sale is seen as fulfilling management's commitment to investors to make clear operational decisions regarding the US business. Beyond the immediate financial impact, the sale to a significant market player facilitates an orderly transfer and frees up considerable resources and management attention previously dedicated to overcoming the geographical and operational challenges overseas. The company will now focus its resources on expanding its core domestic operations in Israel, particularly in marketing and supplying its broad product range to meet the anticipated high demand from major projects like the Metro, other national infrastructure initiatives, and local authority elections.

This strategic move follows recent leadership changes at Akarstein. In August, the company concluded its CEO Amit Lang's tenure and appointed Zvi Akarstein, son of Chairman Giora Akarstein and a co-owner, as his replacement. Lang had only been in the role for a few months. The company's second-quarter financial reports showed a sharp decline in revenue to 190 million shekels from 224 million shekels a year earlier, with net profit dropping from 16.5 million to 2.3 million shekels.

Zvika Akarstein, CEO of Akarstein Group, stated that the sale aligns with the company's strategic plan, stopping the drain on financial and management resources and allowing focus on Israel's growth engines. He added that this will enable the company to optimally leverage significant business opportunities expected in the local market. Deputy CEO Eyal Weinberg noted that the sale immediately improves the group's cash flow and profitability, with the proceeds intended to fund acquisitions and expansion as previously reported.