Bright Food to acquire majority stake in Israel’s Tnuva

Bright Food Group, a state-owned Chinese company, has agreed to acquire a 56.1% stake in Israel-based Tnuva Food Industries from London-based private equity firm Apax for around $960m.

The transaction, which is subject to clearance from the Chinese government, would value Tnuva at ILS8.6bn ($2.5bn).

Tnuva, based in Tel Aviv, produces a range of cheeses, as well as milk, yoghurt, meat and eggs, and reported revenues of ILS7.17bn ($2.05bn) in 2013.

It owns seven of the ten leading food brands in Israel, and accounts for about 14% of shelf space in the country’s supermarkets, according to Apax.

The acquisition amount represents ten times Tnuva’s 2013 adjusted earnings before interest, tax, depreciation and amortisation.

The purchase will give Bright Food access to Tnuva’s dairy processing technology, allowing it to strengthen its dairy business in China.

In 2008, Apax and investment partner Mivtach Shamir Holdings acquired a 77% stake in Tnuva for more than $1bn.

According to a source close to the deal, Mivtach has about ten days to determine if it wants to sell its 21% to Bright Food.

Bright Food noted that it will seek to strengthen cooperation with Tnuva’s smaller shareholders, instead of buying them out, and plans to close the deal by the end of the year.

Bright Food has made several overseas acquisitions in recent years – it acquired British cereal maker Weetabix in 2012 and Australia’s Manassen Foods in 2011.

Bright was formed in 2006 by merging four state-owned companies – Jinfeng Wine, Shanghai Haibo, Shanghai Maling Aquarius and Bright Dairy & Food.

The company also operates tea, dairy and rice farms.