Tnuva Said to Meet Banks as Largest Israel IPO in 3 Years

Tnuva Food Industries Ltd., controlled by private equity fund Apax Partners LLP, is considering an initial public offering that would value the company at 8 billion shekels ($2.2 billion), according to a person familiar with the plans.

The producer of dairy products that began as a cooperative of Israeli kibbutz farms, has met with investment banks, including Clal Finance Underwriters Ltd., and is seeking a listing on the Tel-Aviv Stock Exchange by the first quarter of 2014, according to the person, who asked not to be named because the discussions are private. Apax may also consider an outright sale of the company, according to the person.

“Tnuva’s shareholders are examining various options to enhance the company and its capital structure, one of which is a listing,” company spokeswoman Alona Arieli wrote in a text message. Spokesmen for Clal and Apax declined to comment. Kibbutz and other collective farms own about 23 percent of the company, according to Apax’s website.

A share sale at the valuation being discussed would nearly double Apax’s investment after it bought a 51 percent stake of Tnuva at a $1.03 billion valuation in 2007. The issuance would be the largest listing in Israel since Azrieli Group (AZRG) raised 2.5 billion shekels in June 2010 to expand its real estate holdings.

A listing at that valuation would probably put Tnuva in the benchmark TA-25 Index (TA-25) with competitors Osem Investments Ltd. (OSEM) and Strauss Group Ltd. (STRS), according to data compiled by Bloomberg.

The deal might be opposed by Yitzhak Bader, chief executive officer of Granot, a purchasing organization of kibbutzim, Haaretz reported in March, when it first reported Apax’s listing consideration. While Apax does not need the consent of minority shareholders, their opposition will make it difficult to move ahead quickly, Haaretz said.

Tnuva, which Apax says accounts for over 14 percent of shelf space in Israeli supermarkets, was targeted by consumer protests in 2011 after it increased the price of cottage cheese, a staple in local households. Billionaire Haim Saban, chief executive officer of Saban Capital Group Inc., has been in talks to buy a controlling bid of Tnuva, Calcalist reported in March 2012.

To contact the reporter on this story: David Wainer in Tel Aviv at dwainer3@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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