Following a report (here) that suggested HP and Israel’s biggest private equity fund, FIMI Opportunity Funds, were the front runners to acquire Landa Digital Printing, FIMI has now emerged with an USD$80m ‘offer’ for the beleaguered company. But the move, which seems predicated on the fact that Landa has been backed into a corner, still requires approval from a creditors' meeting and court approval.
Is this finally the end of the road for the self-proclaimed 'inventor' of digital print, Benny Landa
Should these approvals be granted, the nub of the proposed deal is that, in exchange for the allocation of shares and the cancellation of existing shares, after the transaction is completed, the buyer, FIMI will hold 100% of the company's shares. This would mean that Landa Digital Printing’s current major shareholders – notably Susanne Klatten, heiress to the BMW fortune, and the Rausing family of Tetra Pak – would lose their entire investment, so they may well resist the move.
FIMI has proposed compensating the families only if it exits with at least twice its investment. While not unprecedented, FIMI has a track record of such turnarounds, it could take years to realize. So Klatten and Rausing could exercise their right to submit a counter-offer, for example injecting $100 million to regain full control. Such a move would allow them to appoint professional leadership and attempt to salvage their investment. Klatten’s current exposure alone, amounts to almost 80% of the of the company’s USD$500m debt.
If the FIMI deal is approved, up to USD$22m of the USD$80m they will inject into the company will be used to pay off some of the debts, as well as to partially finance the expenses of the arrangement process. Thereafter, the arrangement will allow Landa Digital Printing to be maintained as a going concern and as an active company that employs hundreds of employees and supports suppliers.
Benny Landa himself is expected to exit regardless of the outcome. He has personally invested USD$200m in the company since founding it in 2002. Neither FIMI nor the foreign shareholders appear willing to keep him on, after losses of USD$312million in 2022-23 alone and the recent entry into court-supervised proceedings.
In a twist in the plot, the Official Receiver, the state’s representative, has hinted in his court response that the list of creditors and suppliers that Landa Digital Printing and FIMI have agreed are ‘critical to the continuation of the company’s activities’ – and therefore first in line to be repaid their debts - deserves closer scrutiny. The inference is that the current primary creditors’ list is made up of those that have a closer connection with Landa’s management and/or FIMI.
Ctech reports that ‘whatever the eventual outcome, risks associated with the proposed deal remain high, noting the general consensus that Landa Digital Printing has been, by most accounts, poorly managed. Court filings show the company operated based on letters of intent from customers for 50 printers, but only 11 contracts were ultimately signed. This led to the company burning through USD$10m per month, while paying employees wages in the tens of thousands of shekels.’
FIMI itself is the largest industrial body in the entire Israeli economy and is the country’s biggest private equity firm with more than USD$7bn in assets under management across a diverse range of businesses, including 50 factories around Israel and a further 100 factories and companies worldwide.
True to its reputation, FIMI is expected to signal that its offer is final: ‘take it or leave it’. The fund is known for avoiding tenders and submitting offers late in processes, leaving little room for rivals to manoeuvre.
