Holdings diplomat on the way to the stock market. The company submitted a draft prospectus for the first issue of shares on the Tel Aviv Stock Exchange. The value of the company before the money will range from NIS 1 billion to NIS 1.2 billion. The company will issue 20% of the shares, which means that the raising will amount to NIS 250 million to NIS 300 million. Investors will have to weigh the overall scenarios because Diplomat is a more profitable retail company than the competition (3% net profit from revenue), but there is a threat of it being declared a monopoly.
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Diplomat currently employs about 2,500 people worldwide. The company ended the first nine months of 2020 with revenues of NIS 2 billion, with EBITDA in the amount of NIS 109.2 million, compared to NIS 102 million in the corresponding period in 2019, and with a net profit of NIS 58.7 million. , Compared with NIS 44.6 million in the corresponding period in 2019. In other words, the company has adopted a dividend distribution policy, in which it distributes 50% of its net profit to its shareholders every year. The company has been significantly hurt by the strengthening of the shekel because it also distributes to countries such as Cyprus, Georgia, South Africa and New Zealand.
Good data, maybe too good. That is, the success of the company leads to it being declared a monopoly in its field. Last year, former Economy Minister Eli Cohen urged to recognize the diplomat along with Shastowitz as a monopoly in the field of toiletries (with charges of various indirect actions to prevent parallel imports). The competition commissioner has chosen not to act in the field, but in the current political atmosphere, it is quite possible that the Knesset will require the regulator to reveal sharper teeth in front of huge import companies such as Diplomat and support parallel imports.
The company mentions in the draft prospectus changes in regulatory provisions and legislation as a possible danger and as potentially adversely affecting the Group’s profitability. For example, regulatory requirements regarding the group’s activity in various consumer aspects, including requirements and restrictions regarding product distribution, as well as restrictions in terms of taxation, customs, consumer protection and requirements and restrictions of business restrictions. The company does not expand beyond that, but points out that this is a moderate threat to the company’s profits.
A diplomat is under the control of families Mendel Wyman. It has partnerships with Procter & Gamble (P&G), Mondelez and Nestlé (Georgia). Diplomat distributes and markets leading and well-known products and brands, including: Gillette, Brown, Dorsel, Neutrilon, Lotus, Cluj, Oreo, Kikoman, Heinz, Blue-Band, Milka, Jacobs, Pringles, Ariel, Always, Tempax, Pampers, Beyond-Meat meat brands and more. In addition, the company owns the Starkist tuna brand.
It is a long-standing and leading company in the field of sales and distribution of mass consumer products (FMCG – Fast Moving Consumer Goods), and is the distributor and marketer of many international brands, mainly in the fields of food, grooming and hygiene.
Diplomat is located in Kiryat Sadeh Airport near Ben Gurion Airport, and is one of the leading companies in the Israeli economy in its field. The company sells its products, among others, to retail chains in the fields of food, drugstore chains, pharmacies, containers, restaurants and wholesalers. To be a leading player in the FMCG industry in all areas of its activity.
Diplomat was established in 1963 as a factory for the production of razors, and in 1968 also became a distributor and marketer of toiletries, when in 1996 it sold the factory and focused on distribution and marketing activities. In 1995, it signed an exclusive representation agreement with Procter & Gamble in Israel, and later on similar collaborations with Mondelez, Heinz, Kellogg’s and other companies. These business collaborations have grown stronger over the years, and accordingly the company also inaugurated its operations in Georgia in 2008. Subsequently, the group’s international expansion continued, and it also opened further activities in South Africa and Cyprus (both in 2011), and in New Zealand (2016).
In some of its operating countries, Diplomat Lydia received full handling of the sales and distribution system from Procter & Gamble, in light of the successful cooperation in Israel and the high operational capabilities presented by the company in the Israeli market, where it began its operations.
Diplomat recently acquired a 50% stake in Meditrend, which imports and markets health products, supplements and over-the-counter medications. In addition, the company acquired 50% of CDSL, which is held in cooperation with Chemipal, and which provides the logistics and management services of Marlog to the Super Pharm chain in Israel.
Diplomat provides its customers with a full service, which includes all parts of the supply chain, from the stage of purchasing the products to the final stage of their sale. The company has an advanced technological system, including in the logistics field, which optimally supports sales, ordering processes and costs. In parallel with the marketing and distribution activities, the company also provides its customers with TPL services (storage, collection and delivery) as an external contractor, which is one of the company’s growth engines.
Diplomat currently manages its operations in Israel through its logistics warehouse in Kiryat Sadeh Airport, and it recently signed an agreement in principle to move the warehouse to a site in an area of about 80 dunams in the industrial area of Caesarea.
Diplomat has a number of growth engines for the coming years, such as: deepening activity in its collaborations with international suppliers, expanding the brand basket, increasing activity in the field of technological solutions and services, geographical expansion and expanding activity in the field of herbal substitutes, food supplements and paramedical products.
The company notes in a presentation that together with the prospectus also the results of its pro forma for 2020, according to which, in the best of its estimation, it is expected to end 2020 with revenues of NIS 2.8 billion, adjusted EBITDA of NIS 150 million and net profit. In the amount of NIS 89 million (the pro forma results are less exceptional expenses, and with the inclusion of the results of the companies Meditrend and CDSL acquired at the end of 2020 and the beginning of 2021).