Ackerstein Group Exits US Market After Nearly 40 Years of Losses

After nearly four decades of operations in the American market, the Ackerstein Group is exiting the U.S., concluding activities that have recently become a significant source of losses. The company announced it has signed a binding term sheet for the sale of its entire stake in its subsidiary Acker-Stone for approximately NIS 90 million. The buyer is described as one of the largest and leading companies in the American and Canadian markets for concrete products and interlocking stones.

This marks the end of a very long chapter for Ackerstein, which began operating in North America in 1989, nearly 37 years ago. Over the years, the group established production facilities in the southwestern United States, currently comprising three plants in Corona, Southern California, and in Chandler and Buckeye, Arizona. However, in recent years, the U.S. operations became a burden on the group's financial results, incurring an average annual operating loss of approximately NIS 16 million.

The sale is expected to not only inject about NIS 90 million into the company's coffers but also to halt the substantial annual losses that have eroded profitability and cash flow. For investors, the primary significance of the deal is that Ackerstein is relinquishing its long-standing operations and direct presence in the U.S. market in exchange for removing a loss-making business from its reports. The company anticipates that stopping these losses will directly improve operating profitability and cash flow in the upcoming financial statements.

This move follows commitments made by Ackerstein's management to the capital market to reach clear conclusions regarding the future of its U.S. operations. Beyond the losses, the company noted that its overseas activities demanded extensive resources and managerial attention from the group's Israeli management due to geographical and operational challenges. The sale aims to redirect these resources back to the domestic market.

The proceeds from the transaction are intended to strengthen Ackerstein's financial stability and support its business development plans in Israel. The company plans to focus its activities on opportunities identified in the local market, including major national infrastructure projects like the metro, as well as anticipated demand leading up to local authority elections. Group CEO Zvika Ackerstein stated that the sale of the U.S. operations halts the erosion of managerial and financial resources, enabling the company to concentrate on growth engines in Israel. Ackerstein, founded in 1925 and controlled by the Ackerstein family, operates 18 plants in Israel across three production sites.