The Yohannoff chain enters the stock market. The food chain, controlled by the Yohannoff family and managed by Eitan Yohannoff, is expanding its activities to the stock stores. The chain signed an agreement to acquire control (approximately 50.1%) of the Cheap Stock chain for NIS 45 million, at a value of NIS 90 million. The acquisition was made against the background of the growth that the stock market is recording and with the intention of later issuing the company at a value of NIS 300 million.
Read more in Calcalist
Cheap Stock, operates over 50 discount stores nationwide and is preparing to open 10 more stores in the coming months. The chain is managed by Adir and Nono and Sahar Kochavi, who will hold 29.95% and 19.95%, respectively, after the acquisition.
The acquisition of control of Cheap Stock will be made through the purchase of shares that constitute approximately 50.1% of the two private companies that centralize the activities of Cheap Stock: BA. Cheap Stock Distribution Ltd., which operates as the import and distribution arm of ‘Cheap Stock’ V. Talia Import and Marketing Ltd., which owns and operates the chain of stores through subsidiaries or franchisees. Yohannoff will purchase the shares from the four existing shareholders of the Cheap Stock Group (not in equal parts) so that after the acquisition the shareholders in the group will be Yochannoff (approximately 50.1%), Adir (approximately 30%) and Sahar (approximately 19.9%) only. Adir and Sahar will continue to manage the network and will be entitled to a grant for results.
Eitan Yohananoff said: “The deal with Cheap Stock is part of the chain’s strategic move to expand and reach every home in Israel through a launch activity for our food retail business. We identify growth potential in the discount industry in Israel and the synergy between companies will create great value and improve the customer service experience. In accordance with the company’s vision, we expect to increase activity significantly and flood the value of Cheap Stock while examining market conditions with the intention of making a future IPO. “
Cheap Stock operates in the field of home products and other products at discount prices. The chain imports and sells in stores products of various types, such as student supplies, housewares, disposable utensils, plastic products, storage utensils, cleaning products, toys, gifts, ornaments, storage products, kitchen utensils and more. Cheap stock stores hold a permit and operate in an emergency, due to the fact that they sell essential products according to the definition of the Israeli government.
According to the company’s data, the revenues of each Cheap Stock group (including the revenues of branches in franchises) in 2020 amounted to a total of NIS 230 million. Cheap stock sales in 2020 grew by 27% to NIS 71 million. Operating profit amounted to NIS 12.3 million and operating profit was 17.3% of sales) and net profit amounted to NIS 8.7 million.
The Yochananoff chain, which has 28 branches nationwide, is preparing to open 7 more branches by the end of the year. In 2019, the company was issued to the public on the Israeli Stock Exchange and its securities are traded as part of the Tel Aviv 90 Index. Yohananoff was represented in the transaction by Adv. Amnon Sorek from the law firm Hamburger Evron & Co. Cheap Stock was represented in the transaction by Adv. Oded Oz from the law firm Oz Fox and Adv. Itai Hefler from the law firm Meir Hefler.
The stock market has been booming in recent years and in the past year has recorded a jump in sales, due to the closure during which these stores were allowed to operate because there is a sale of essential products. Last September, the Harel Wiesel Fox Group reported that it had signed a franchise agreement with the Greek Jumbo chain, which operates in the form of large branches and sells cheap products from a variety of categories – toys, housewares, clothing, baby accessories, office supplies and more.
A legal battle is currently underway between Wiesel and Roi Vanunu, owner of the Jumbo Stock chain, over the use of the Greek chain’s trademark in Israel. Market leader. As revealed in Calcalist, sales of the Jumbo Stock chain, which has 12 branches, have jumped 240% in the last two years to NIS 62.8 million. The chain is in advanced negotiations with a foreign investor and a potential partner, with the aim of expanding in Israel, which will further increase the pace of its development. In addition, the chain is in the process of establishing a sub-chain of urban stores, which will allow it to compete with Max Stock, whose main activity is in small stores in the heart of the cities. Max, controlled by Apax, grew under the auspices of the corona and its sales in the first half of 2020 amounted to NIS 472.4 million, an increase of 34% of revenues in the corresponding period. The chain recorded a net profit of NIS 38 million in the first half of 2020, compared with NIS 35.3 million in the corresponding half in 2019.