Published On: Thu, Jul 21st, 2016

Israeli Plastic Company Sells Off 80% to European Equity House

Keter Plastic, valued at $1.7 billion, operates 29 plants in Israel, Europe and the U.S and employs about 1,400 people in Israel.

In one of the biggest corporate sales ever in Israel, the Sagol family agreed yesterday to sell control of its Keter Plastic to the European private equity fund BC Partners for about 1.36 billion euros ($1.5 billion).

plastic products

Israeli Plastic Company Sells Off 80% to European Equity House

Sources said BC Partner will be buying 80% of the closed held company, whose products range from ubiquitous white plastic chairs and garden sheds to trays and toolboxes, are a fixture of Israeli life. The company, which began as a workshop in Jaffa in 1948, sells its products worldwide and operates about 29 plants in the United States and Europe.

The Sagols, led by brothers Sami and Yitzhak, will retain 20% of the company, but sources said BC Partner would have an option to buy it in the future. In all likelihood, the fund will eventually float the company on an overseas stock market.

Keter Plastic, which is part of Keter Group, was not commenting on the report, a spokeswoman in Israel told Reuters. A spokeswoman at BC Partners was not immediately available for comment.

But another source told Reuters: “BC Partners has won exclusivity and is discussing the acquisition of a majority stake. The deal values the business at close to $1.6 billion.”

BC Partners was the surprise winner in the bidding, beating out a rival joint offer from much bigger rivals the European private equity fund CVC and Goldman Sachs. A third bidder, the U.S. buyout fund Carlyle Group, dropped out earlier, apparently because its bid was too low.

Since it was formed in London in 1986, BC Partners has bought some 91 companies, mainly in Europe and North America, for a combined 100 million euros. Still, that makes it smaller than the other investors that had been circling around Keter, which reportedly included the Blackstone Group and Apax.

BC Partners hasn’t made a final offer, rather it has won rights to conduct exclusive talks with the Sagols toward final terms, a process that sources said would probably take 10 to 14 days.

The transaction would be much larger that the 2013 sale of the navigation app Waze to Google, but it is unusual for Israel in that Keter is not a high-tech company. Still, Israel has seen some big non-tech exits in recent years, most notably the $6 billion sale of machine-tools maker Iscar to Warren Buffett’s Berkshire Hathaway, which was also acquired in a two-part deal of 80% and 20%.

Last week, China National Chemicals Corporation agreed to buy the remaining 40% of Israeli agrochemical maker Adama it doesn’t own from Discount Investment Corporation for $1.4 billion.

The Sagols had been considering selling Keter for several years and began the sales process just over a year ago, seeking to sell the stake reportedly for $2 billion. Sagol had preferred to keep Keter a family company, but after reaching age 70 three years ago he concluded otherwise and reportedly tried to interest Buffett.

The company was founded by Sami Sagol’s father Yosef, but Sami Sagol, who was born in Turkey and moved to Israel at the age of 15, was the one responsible for turning it into a multinational concern with 4,000 employees worldwide and products sold in about 25,000 retail outlets.

The company initially sold imitations of products designed and sold abroad before become an innovator of a wide range of plastic storage and seating solutions. Sami Sagol, a Technion Israel Institute of Technology graduate, introduced automated assembly lines after he joined the business in 1971. Twenty years ago, the company began buying up medium-sized competitors overseas, mainly of them in financial difficulties, including the French company Allibert for $70 million in 2003 and the housewares unit of America’s Rubbermaid in 2005.

Even as Keter grew into a multinational, management remained a mostly family affair. The first CEO to be hired outside the company was Michel Ben Weiss, a former Strauss Group executive who joined about six years ago. Last year, Keter had revenue of 800 million euros, a 20% increase from 2014, and net profit of 100 million euros.