Shikun VeBinui submitted an offer to purchase 50% of Egged's shares

Last night, Shikun VeBinui submitted an offer to purchase 50% of Egged's shares. Shikun VeBinui's offer was submitted in equal partnership with the American fund Brookfield, which specializes in real estate, infrastructure and alternative energy investments - and this is the first time it is trying to acquire a company in Israel.
Brookfield is an American fund that manages $ 625 billion in assets in 30 countries and employs 150,000 people in the companies in which it invests. Brookfield invests in real estate, and owns 318 square meters of properties in the United States, Canada, Britain, Germany, Australia, Brazil, India and South Korea. Brookfield is one of the largest investors in the world in the field of infrastructure. The company is also active in the energy market. Renewable, and holds 6,000 power plants in various technologies with a total capacity of 20 gigawatts in North and South America, Europe, India and China.
Other entities that submitted an offer to purchase 50% of Egged's shares are Colmobil, controlled by the Harlap family, which is an importer of Mercedes, Mitsubishi and Hyundai in Israel; and the private investment fund Fortissimo, which is managed by Yuval Cohen; Mazda, Ford, BMW and Mini Minor, controlled by Gil Agmon, and subsidiary Veridis; And a group that includes the car import and real estate company Kerso, the insurance company Migdal and the Aluma Infrastructure Fund.
According to the structure of the transaction, the selected investor will purchase 50% of Egged's shares from its current shareholders. At the end of two years from the completion of the transaction, and up to five years from the completion of the transaction, Egged's current shareholders will have an option to sell their shares to the investor at the initial transaction price. The sale of 50% of its shares was the condition set by the state for turning Egged from a cooperative into a company; A move approved by the cooperative members by a 91% majority in May 2019.
The inclusion of a partner at a rate of at least 50% will allow the union to maintain the fruits of efficiency and enter into complementary areas of activity. Egged, which hired HSBC Services as an investment bank, aims to execute the deal at a company value of NIS 4 billion.
Egged is the largest bus operator in Israel with a 32% market share, a fleet of 2,900 buses and 9,100 employees. The company transports 350 million people a year, and its passenger, according to which it receives payment from the state, is 345 million kilometers
Egged launched operations in Poland in 2006, where it is the leading private company in public transportation with a 32% market share through Mobilis; And in the Netherlands it is a leading factor in public transport with EBS.
Egged investors apparently estimate the growth potential inherent in public transportation in light of the rapid growth in the country's population, at an annual rate of 1.8% - four times the growth rate of the European population on average; Density on Israeli roads - 2,730 vehicles per kilometer - twice the density in the next country, Spain, and three times the average density on the roads of OECD countries; the low use of public transport in major cities in Israel - Tel Aviv, Haifa and Jerusalem (12%, 15% 20% respectively), compared to 35% in Amsterdam, 38% in Copenhagen and 45% in Berlin, and the expected upgrade in the level of public transport service, in parallel with the expected launch of light rail lines and the termination of the operational agreement between Egged and the country.
Gad is expected to improve operational efficiency, following investments supported by a generous government subsidy in rejuvenating the bus fleet from an average of 6.3 years in 2020 to 3.8 years in 2023. Egged must part with substantial clusters in the coming years, as part of the agreement that regulated its activities and was signed between it and the state.
This agreement promises to bind support until 2029, and the ability to anticipate its results with a relatively high level of certainty. However, the agreement obliges Egged to put out to tender in 2022 high-kilometer lines such as Ashdod-Ashkelon-Jerusalem, Jerusalem-Beit Shemesh, and in 2023 the lines to the suburbs of Rishon Lezion and lines in Jerusalem. Which provide it with travel of 4.1 and 6.2 million km per year respectively. This agreement also allowed Egged's subsidiary to compete in tenders for nine clusters with a total distance of 117 km, which will be published by 2025.
In 2017, Egged won a concession to operate the red line of the light rail through its subsidiary Tevel (51%), and it competes in its joint group (17.5%), Shikun VeBinui (40%) and the Chinese company CRCC (approximately 27.5%) on the railway lines. The green and purple relief in Tel Aviv.
Egged also operates a shuttle service on demand in Haifa and Jerusalem under the "Tic Tech" brand name, as well as domestic tourism services using 400 buses (a service launched in March and September 2020 in Haifa and Jerusalem). In this service, the number of passengers in Haifa grew from 1,000 in March 2020 to 35,000 in June 2021. The number of passengers in the Tic Tac service in Jerusalem grew from 3,000 in October 2020 to 24,000 in June 2021.
In addition, Egged holds a portfolio of quality real estate assets. Its revenues decreased in 2020 compared to 2019 as a result of the corona crisis, and amounted to NIS 3.6 billion. Egged's profit decreased by 50% in 2020 compared to 2019, and amounted to NIS 97 million.
Current operations generated a surplus of NIS 399 million in cash flow in 2020 - a decrease of 56% compared to 2019. The company's cash flow and cash flow operating profit will help it service a net financial debt of NIS 2 billion as of the end of 2020.