Tycoon to sell supermarket chain in wake of social justice protests

Nochi Dankner, chairman of IDB group and one of Israel's most prominent tycoons, has announced the sale of most of his company's stake in Shufersal, one of Israel's largest supermarket chains. According to the Israeli financial daily Globes, British businessman and real estate mogul Leo Noe will get 32 percent of IDB’s share in the chain, while the Bronfman Fisher Group, owned by Matthew Bronfman and Shulem Fisher, is expected to get 13.5%, adding to the 18.56% stake it already holds.

The announcement was released Wednesday through one of the group's holding companies, Discount Investment Co., which oversees the operations in the supermarket chain. IDB controls about 48% of Shufersal, Israel's largest retail chain, and 50% of the voting rights in its board of directors. According to statement, IDB will receive 2.42 billion shekels ($648 million), roughly half of Shufersal's market value, over the next five years. However, the deal must be approved by the Israel Antitrust Authority before it is allowed to go ahead. The move has sent shockwaves across Israel's business community, as Shufersal is one of IDB's most important holdings, and is considered a safe source of revenue due to its 37% market share in the retail industry.

Get the Israel Hayom newsletter sent to your mailbox!

When Israelis took to the streets in unprecedented numbers to protest the rising cost of living this past summer, they named Dankner, among other tycoons, as responsible for the travails of the middle class by stifling competition through excessive market concentration. Shufersal was even subjected to a student-led consumer boycott for allegedly inflating prices. It eventually buckled under the pressure and agreed to lower prices on staple goods for the next few months.

Some 650 million shekels ($175 million) is expected be paid up front in the sale, with the balance to be paid after five years.

“I have great affection toward Shufersal and my heart has always been with Shufersal and its employees,” Dankner said Wednesday. “But as an investment corporation that has the interest of its shareholders in mind we have to remember to distinguish between our love for Shufersal and profit considerations. After being offered a good deal, the latter had to prevail. The buyers are expected to hand us an impressive sum and we have offered them a loan to facilitate their purchase.”

Dankner said IDB would scale down its business operations in Israel. “We have sold dozens of companies and businesses and expanded overseas,” Dankner said. He noted that the proportion of IDB's activities abroad, initially 7%, has risen to 40%.

Like our newsletter? 'Like' ourFacebook page!