The acquisition of control in Politiv by Kedma Fund will be completed today. Calcalist has learned that the fund and the owners of Politiv, brothers Avner and Arieh Golan, will sign the completion of the deal today. The company’s value in the deal will stand at 270 million NIS; however, if the company’s targets for 2023 are met and the EBITDA reaches 70–80 million NIS, the value could rise to half a billion NIS. Kedma will acquire 50.1% of the shares of the agricultural plastic sheeting manufacturer in a staged deal.
A small amount will be paid immediately, while half of the consideration for 25% of the company will be paid at the end of the year based on 2023 results. The second half of the consideration for an additional 25% will be paid at the end of 2025, based on the profits from 2023 to 2025. The valuation in the first part of the deal refers to the 2022 results. In that year, there was a decline in sales similar to the rest of the industry, and the owners preferred the valuation to be determined based on 2023 results. The valuation at which the deal is being executed reflects a multiple of about 6 on Politiv’s EBITDA (cash flow operating profit).
It was also learned that the two founders and owners of Politiv, brothers Avner and Arieh Golan, who serve as joint CEOs, have committed to stay and manage the company for several years. Kedma will not merge Politiv with the other companies it has acquired that border on the field, primarily the Zaricha Group.
Developing in Russia and Mexico: Politiv is considered the industry leader in Israel from a technological standpoint. Its annual sales volume was more than 560 million NIS in 2022, and the EBITDA was approximately 45 million NIS. The company believes that the EBITDA will grow significantly in the next year or two. The company carries a debt of about 90 million NIS, which Kedma will take upon itself.
CEO Avner Golan has committed to stay with the company for an additional 5–7 years, at which point he will be able to exercise an option to sell his remaining holdings.
“An EBITDA of 45 million NIS does not satisfy me, and that is the reason we insisted that the deal be based on 2023 results, which will be the representative year,” said Avner Golan, who founded the company in 1984, to Calcalist.
What are the company’s goals? “The company’s goals are to reach sales of one billion NIS within 3 years. We have plans on how to do it; otherwise, they wouldn’t have bought it. We will reach these revenues by doubling production in Mexico to serve the local market and the markets in the US and Latin America. Another challenge facing us is the law requiring products to include 30% recycled material starting in 2027. We are striving to find solutions for recycling used sheeting. The company will unequivocally meet the goals it has set for itself. This is a private company that sees only its success before its eyes, and its goal is to be among the top five in the world in its field, polyethylene, like Sony and Samsung are in theirs.”
Golan added: “The company has many arms—Spain, India, Mexico, South Africa. The company is developing in Russia, and the situation there allows us to sell much more than we have sold to date because Israel is not restricted in sales to Russia. Additionally, the weakening of our Israeli competitor, whom I will not name, strengthens the Politiv brand.”
Why did you decide to sell? “We have a next generation that is doing excellent work. Five sons who work in the company in various roles. But what? They are not ready to take on management responsibility like I took. They want to raise their children and family. What matters to this generation is picking the kids up from kindergarten at 4:30. This is a different generation from us. I am 64 today, and my plan is to be out by age 70. I built this business. I lived it every minute and there aren’t many like me. Kedma didn’t buy Politiv as a company. Anyone can buy iron and machines. They bought Avner and Arieh Golan and the human capital of the employees, because Avner lives from challenge to challenge and has a dream to be the Sony and Samsung of the field.”
Why did you choose Kedma? “There were many who wanted to buy us. The people at Kedma are nice, good, and ego-free people. I really enjoy working with them.”
The results of the public competitor Ginegar, which is traded at a value of 98 million NIS, testify to how difficult 2022 was in the industry. Ginegar’s revenues in 2022 stood at 627 million NIS and the EBITDA at 30 million NIS.
Politiv is an industrial company engaged in the production of plastic sheeting for agriculture and industry. Its direct and largest competitor, Ginegar—controlled by Shmuel Volodinger, Bernice Heller, and the kibbutzim Ginegar and Barkai—lost more than 18 million NIS in 2022. This was despite the fact that its revenues stood at 627 million NIS in 2022, slightly more than Politiv’s. Ginegar’s decline over the years is attributed by the market to management capabilities, a bloated employee mechanism and management, and difficulties in competing with international manufacturers in the field. Politiv, on the other hand, was wise enough to adopt a relatively lean employee mechanism, using cheap labor in the Jordan Valley, for example, where a significant portion of its employees are Palestinians. Furthermore, Politiv is a more advanced and efficient company, which has grown organically over the years and acquired small companies.
Kedma is banking on plastic: The owners of Politiv, Avner and Arieh Golan, sons of Iranian immigrants, live in Moshav Ganei Am in the Sharon region. The pair of brothers will receive an option to sell their remaining shares together with Kedma in the event of a future sale. Politiv’s main plant is located in the Jordan Valley on a plot of 17,000 square meters of built-up space and 25 dunams. The headquarters are in Kibbutz Einat, where the company produces a variety of smart sheeting for agriculture and industry. Politiv’s products are multi-layered sheets, considered particularly advanced due to their high level of precision. The production of the sheets is computerized and automatically controlled, which reduces the volume of errors characteristic of such industries. The plant in the Jordan Valley is actually the plant of the Meteor company, which it acquired in 2015. In this plant, Politiv produces insect protection nets intended for agricultural use.
In addition, in 2013, Politiv acquired a plastic sheeting production plant in Mexico, and a year later it began working at full capacity and now produces 17,000 tons. The plant serves sales to customers in Mexico and South America. Politiv also exports its local production to European countries. In total, it sells to 50 countries around the world, including the US, Spain, Italy, Australia, the Netherlands, and India. The marketing of the products is done directly by the company.
At the beginning of the year, Politiv tried to acquire the Plastnir company from Kibbutz Nir Eliyahu and submitted an offer as part of Plastnir’s stay of proceedings. The court-appointed trustee for the company, Adv. Alona Bomgarten, supported a counter-acquisition offer by Ahron Frum, who offered 19.2 million NIS. Frum holds 50% of Plastnir. Bank Mizrahi Tefahot, the primary creditor of Plastnir, along with Bank Mercantile (the company owes both banks 25 million NIS), argued that this was an 11 million NIS “haircut” to the joint debt and supported Politiv’s offer, but suffered a defeat when Judge Irit Notovitz-Weinberg accepted Bomgarten’s position, which was supported by the Official Receiver’s position, and the company will be sold to Frum. The ruling was given yesterday.
The acquisition of shares in Politiv, if it goes through, is essentially a continuation of Kedma’s strategy to enter the nylon and plastic products field intensively. Last June, Kedma acquired 100% of the shares of Zaricha Halavin, a family company active in the field of plastic injection. Kedma carried out the acquisition at a company value of 200 million NIS. Zaricha operates at two main sites, in the Ma’alot-Tarshiha industrial zone and the Barkan industrial zone, and employs 300 workers. The company also holds a production site in China, where it employs 30 workers.
Through Zaricha, Kedma acquired 50% of the shares of Plas-Fit at a valuation of 164 million NIS. Plas-Fit, operating in the Bar Lev industrial zone east of Acre, develops and manufactures connectors for water pipes and optical fibers for industry, agriculture, communications, and infrastructure, and employs about 120 workers.
Kedma Capital Fund is managed by Uri Enan, Gilad Halevy, and Gilad Shavit. Recently, Roy David joined as a managing partner in the fund.